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8946 



Bureau of Mines Information Circular/1983 




Selected Raw Material Requirements 
for Japan's Specialty Steel Industry 



By E. Chin, John C. Wu, L. Nahai, Gordon L. Kinney, 
and Charles L. Kimbell 




UNITED STATES DEPARTMENT OF THE INTERIOR 



Information Circular 8946 



Selected Raw Material Requirements 
for Japan's Specialty Steel Industry 



By E. Chin, John C. Wu, L. Nahai, Gordon L. Kinney, 
and Charles L. Kimbell 




UNITED STATES DEPARTMENT OF THE INTERIOR 
James G. Watt, Secretary 

BUREAU OF MINES 
Robert C. Horton, Director 



As the Nation's principal conservation agency, the Department of the Interior 
has responsibility for most of our nationally owned public lands and natural 
resources. This includes fostering the wisest use of our land and water re- 
sources, protecting our fish and wildlife, preserving the environmental and 
cultural values of our national parks and historical places, and providing for 
the enjoyment of life through outdoor recreation. The Department assesses 
our energy and mineral resources and works to assure that their development is 
in the best interests of all our people. The Department also has a major re- 
sponsibility for American Indian reservation communities and for people who 
live in Island TerritOTies under U.S. administration. 




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Library of Congress Cataloging in Publication Data: 



Selected raw material requirements for Japan's specialty steel industry. 

(Information circular ; 8946) 

Bibliography: p. 34. 

Supt. of Docs, no.: I 28.27:8946. 

1. Steel industry and trade— Japan. 2. Steel industry and trade- 
United States. 3. Steel alloys— Economic aspects— Japan. 4. Raw 
materials— Japan. I. Chin, Edmond. II. Series: Information circular 
(United States. Bureau of Mines) ; 8946. 



-f^^m^^m 622s [333.8'5l 83-600090 [HD9526.J32] 



For sale by the Superintendent of Documents, U.S. Government Printing Office 

Washington, D.C. 20402 



s 



CONTENTS 

(^ Page 

Abs tract 1 

i Introduction 2 

^ Overview of the Japanese economy 2 

^Japan's mineral dependency 3 

J Status of the Iron and steel Industry 3 

Status of the ferroalloy Industry 4 

Industry structure 4 

Production 6 

C^ Trade 6 

^ Supply 6 

^ Consumption 10 

\]\ Raw material requirements and supplies 10 

Chromium 10 

•^ Cobalt 13 

Manganese 14 

Nickel 18 

Tungsten 18 

Status of the specialty steel Industry 21 

Production 21 

Consumption 21 

Trade 21 

Raw materials policy 24 

Measures to assure supply 25 

Stockpile programs 25 

Chromium 26 

Cobalt 27 

Manganese 28 

Nickel 29 

Tungsten 30 

Implications of supply Interruption 31 

Impact on the Japanese economy 31 

Impact on the U.S. economy 32 

Conclusions 33 

Bibliography 34 

TABLES 

1. Iron and steel production, 1970-81 4 

2. Percentage share of ferroalloy output In 1981, by producer 5 

J 3. Ferroalloy production for 1972-81, by type 7 

^4. Ferroalloy trade for 1972-81, by type 8 

j 5. Ferroalloy consumption for steel production, 1973-81 11 

^^^ 6. Salient chromium statistics 12 

p 7. Salient cobalt statistics 15 

^ 8. Salient manganese statistics 16 

9 . Salient nickel statistics 19 

10. Salient tungsten statistics 20 

Kll. Production of hot-rolled specialty steel, by type 21 

12. Production and sales of specialty steel semimanufactures In 1981 22 



1^ 



^13. Consumption of specialty steel In 1981, by type 22 

X^ 14. Japanese exports and U.S. imports of specialty steel, 1973-81 22 

15. Export of selected products containing specialty steel 23 

16. Gross domestic product in 1980, by Industry 31 

17. Employment in 1980, by Industry 31 

18. Demand for specialty steel products in 1980, by Industry 32 



SELECTED RAW MATERIAL REQUIREMENTS FOR JAPAN'S SPECIALTY STEEL INDUSTRY 

By E. Chin, ^ John C. Wu, ^ L, Nahai,^ Gordon L, Kinney,^ and Charles L, Kimbell 



ABSTRACT 

Although Japan is a major producer of crude steel, it is poor in in- 
dustrial raw materials. This Bureau of Mines report describes Japan's 
raw material needs for chromium, cobalt, manganese, nickel, and tungsten 
to produce ferroalloys and alloy steels. Japanese imports of these ores 
or metals by quantity and source are given for 1972-81, inclusive, to 
indicate (1) the changes in the consumption and supply pattern, and (2) 
the degree of Japan's dependence on foreign sources. This report also 
describes measures implemented by Japan to reduce the risk. of supply in- 
terruption, and discusses the possible implications of supply shortages. 



^Physical scientist. 
^Economist. 
Division of Foreign Data, Bureau of Mines, Washington, DC. 



INTRODUCTION 



Although Japan is poor in industrial 
raw materials and fuels, it ranks among 
the top manufacturing countries in the 
world. Of its metal industries, iron and 
steel play a crucial role in Japan's 
economy despite its overwhelming reli- 
ance on foreign sources of iron ore and 
coal. In 1982, Japan was the second 
largest world producer of crude steel. 
Moreover, downstream production of spe- 
cialty steel3 is likewise of world sig- 
nificance. For alloying ingredients, the 
ferroalloy and specialty steel sectors 
are similarly dependent on foreign raw 
materials. Japanese industry is totally 
dependent on imports for nickel and al- 
most wholly so for cobalt. In addition, 
domestic mine production contributes only 
a modest share of the industrial require- 
ment for chromium, manganese, and tung- 
sten. Hence, severe limitations on se- 
curing raw material supplies of cobalt, 
chromium, manganese, nickel, and/or tung- 
sten would affect Japan's industrial pro- 
duction, and in turn, would affect coun- 
tries that import a substantial volume of 
Japanese manufactures containing these 
metals. 

The bulk of Japan's ferroalloy supply 
is consumed in the production of various 
steel compositions; exports represent on- 
ly a small percentage of demand. The 
United States has been the largest market 
for Japanese ferroalloys, but the share 



of total U.S. imports, never large, has 
been dwindling for the past decade. 
Japan exports a larger quantity of spe- 
cialty steel, and exports to the United 
States have accounted for 30% to 40% of 
U.S. imports. 

Exports of steel products, on the other 
hand, make a significant contribution to 
Japan's overall economy whether in the 
form of semimanufactures or as an inte- 
gral component of finished goods. A 
fairly substantial share of these prod- 
ucts is exported to the United States, 
and this constitutes a substantial part 
of total U.S. imports in these classes. 
Thus, the impact of any significant 
shortfall in the supply of cobalt, chro- 
mium, manganese, nickel, and tungsten 
would cause Japan to curtail exports of 
ferroalloys and specialty steel semimanu- 
factures and to maintain the highest vol- 
ume of exports of finished goods. 

Because of its import dependency, the 
Japanese government and industries have 
adopted measures to cope with supply in- 
terruptions. These include diversifica- 
tion of supply sources and metal stock- 
piling. This report examines the impact 
of interruptions of raw material supplies 
to Japan's specialty steel industry and 
examines the subsequent impact on the 
United States. 



OVERVIEW OF THE JAPANESE ECONOMY 



Japan's economy ranked third in the 
world, with a gross national product 
(GNP) of $1,139.3 billion in 1981 (at 
Y220.54 = US$1. 00). The GNP nearly dou- 
bled between 1965 and 1970, doubled 

^In U.S. usage, specialty steel gen- 
erally includes stainless steels, tool 
steels, high-speed steels, high-tempera- 
ture alloys, superalloys, and miscellane- 
ous special-use alloys. The Japanese 
data cited in this report also include 
indeterminant types and quantities of 
carbon alloy steels in the specialty 
steel classification. 



bfetween 1970 and 1975, and increased 70% 
between 1975 and 1981. Major industries 
are metallurgical and engineering, elec- 
tric and electronic, textile, and chemi- 
cal, all of which depend substantially on 
imported materials — ores and metals. The 
dependency is particularly great for min- 
erals and fuels, which provide the basis 
for a gigantic processing and manufactur- 
ing industry for the domestic and export 
markets. Of total 1980 exports of $130.7 
billion, 88% was manufactures (including 
27% machinery, 23% motor vehicles, and 
14% iron and steel). Manufacturing, min- 
ing, and construction accounted for 35% 



of employment. For the same period. Im- 
ports totaled $122.9 billion: 50% fossil 
fuels, 17% manufactures, 13% foodstuffs, 
and 8% machinery and equipment. Despite 
Japan's heavy reliance on fossil fuel 
imports, the country withstood the shock 
of substantially higher petroleum prices 
in 1974 and remained competitive in the 
world marketplace. This was achieved 
through monetary and fiscal policies 
such as curtailment of spending for 
public works, increased taxes, limits 
on credit expansion, and labor wage re- 
straints. The economy also benefited 
from a sustained market for exports and 
an increase in labor productivity in the 



manufacturing sector. The index for la- 
bor productivity 1975=100 increased from 
127 in 1978 to 142 in 1979, and to 160 in 
1981. The total labor force grew from 
55.3 million in 1978 to 57.1 million in 
1981. The unemployment rate decreased 
from 2.2% in 1978 to 2.0% in 1980, but 
rose to 2.2% in 1981. The favorable 
trade balance in 1980 indicates that the 
second increase in oil prices of 1979 has 
also been taken in stride by the Japanese 
economy. Japanese goods and manufactures 
are expected to remain competitive in 
world markets and earn for Japan the 
funds needed for Importing fuels and raw 
materials, as well as other requirements. 



JAPAN'S MINERAL DEPENDENCY 



Japan is dependent on imports of for- 
eign ores and metals; the value of domes- 
tic mine output constitutes less than 1% 
of the GNP. Its self-sufficiency is lim- 
ited largely to nonme tallies such as 
aggregates, bromine and iodine; and lime- 
stone, dolomite, and seawater magnesia. 
At the other extreme, Japan is 100% de- 
pendent on foreign sources of bauxite 
(aluminum), nickel, and titanium, and al- 
most wholly dependent on foreign sources 
for chromium, iron, manganese, oil and 
natural gas, and uranium. Indigenous 
ores account for about 5% of the refined 
copper metal production, about 25% of the 
lead metal, and to about 35% of the zinc 
metal. 

In contrast to the very low contribu- 
tion of domestic mineral production to 
the GNP, the country's mineral processing 
and smelting industries account for about 
19% of the GNP. In fact, industries that 



process minerals and produce metals , 
specifically iron and steel, nonferrous 
metals , and cement and nitrogenous fer- 
tilizers, are very large. Peak annual 
production during the 1970' s includes the 
following, in million tons: 4 aluminum 
1.1, copper 1.0, steel 119, ferroalloys 
2.3, lead 0.2, zinc 0.9, and cement 87. 
With respect to fuels, Japan has had a 
peak production of 1,700 million 42-gal 
barrels of petroleum refinery products 
and 46 million tons of coke from imported 
and some domestic coal. 

Securing a stable supply of overseas 
raw materials (specifically, ores and 
metals) at reasonable prices from as many 
different sources as possible has been a 
critical element of Japan's foreign eco- 
nomic and commercial policy. The section 
"Raw Material Policy" includes a brief 
outline of the measures taken by the gov- 
ernment to implement the policy. 



STATUS OF THE IRON AND STEEL INDUSTRY 



Japan's steel industry paralleled the 
growth of its economy increasing from a 
crude steel production level of 4.8 mil- 
lion tons in 1950, to a peak of 119.3 
million tons in 1973 (table 1). With an- 
ticipated output of 99.5 million tons in 



1982, Japan ranked second as a producer 
of crude steel following the U.S.S.R. 

^Throughout this report, "tons" means 
"metric tons." 



TABLE 1. - Iron and steel production, 1970-81, million tons 









Crude 


Hot-rolled semimanufactures 










Share of 


Year 


Pig iron 


Ferroalloys 


steel 


Specialty 
steel 


Other 
steel 


Total 


specialty 
steel in 
total, % 


1970 


68.0 


1.7 


93.3 


7.4 


68.6 


76.0 


9.7 


1971 


72.7 


1.9 


88.6 


6.9 


65.2 


72.1 


9.6 


1972 


74.1 


1.7 


96.9 


7.2 


74.9 


82.1 


8.8 


1973 


90.0 


2.0 


119.3 


9.1 


92.6 


101.7 


8.9 


1974 


90.4 


2.3 


117.1 


9.3 


91.0 


100.3 


9.3 


1975 


86.9 


2.1 


102.3 


8.0 


77.9 


85.9 


9.3 


1976 


86.6 


2.0 


107.4 


9.9 


83.2 


93.1 


10.6 


1977 


85.9 


1.8 


102.4 


10.3 


79.6 


89.9 


11.5 


1978 


78.6 


1.5 


102.1 


11.7 


79.6 


91.3 


12.8 


1979 


83.8 


1.9 


111.7 


12.5 


89.1 


101.6 


12.3 


1980 


87.0 


1.9 


111.4 


12.9 


88.9 


101.8 


12.7 


1981 


80.0 


1.6 


101.7 


13.3 


79.8 


93.1 


14.3 



During the first modernization program 
(1951-56) of the iron and steel industry, 
three integrated steelworks were comr- 
pleted: Chiba in 1951, Kure in 1952, and 
Hikari in 1955. Introduction of new 
technology by the industry included hot- 
rolled silicon steel sheet, hot strip 
rolling, continuous galvanizing, electro- 
lytic tinning, and basic oxygen furnace 
(BOF) steelmaking. During the second and 
third modernization programs (1957-61) 
and (1962-66), five integrated steelworks 
were inaugurated: Nagoya in 1958, Mizu- 
shima and Sakal in 1961, and Fukuyama and 
Kimitsu in 1965. New technology intro- 
duced during this period included com:- 
puter control, cold-rolled silicon steel 
sheet, vacuum degassing, controlled- 
pressure rolling, continuous casting, di- 
rect reduction, and blast furnace high- 
top-pressure operation. During 1967-68, 
construction of the Kashima, Keihln, 
Kakogawa integrated steelworks were com^ 
pleted, in that order. Japan's newest 



integrated steelworks is the Oita Works 
of Nippon Steel Corp. , which was complet- 
ed in 1971. Plant operation is complete- 
ly computer controlled, and the mill fea- 
tures 100% continuous-casting operation. 
New technology introduced between 1967 
and 1980 included blast furnace stove 
cooling, pelletlzlng, coke dry quenching, 
and bottom blown BOF steelmaking (Q-BOP). 
The integrated steelworks are coastally 
located, facilitating receipts of metal 
ores and coal from overseas suppliers. 
Raw materials discharged from giant car- 
riers feed some of the world's largest 
(5,000-m^) blast furnaces, which in turn 
feed large basic os^gen furnaces, and 
then modern rolling mills. 

A substantial share of Japan's steel 
production (e.g. , 32% in 1981) is export- 
ed» Although the United States and the 
European Comiminity are the principal mar- 
kets, Japan exports steel to dozens of 
countries on all continents. 



STATUS OF THE FERROALLOY INDUSTRY 



INDUSTRY STRUCTURE 

In the past 5 years, the active Japa- 
nese ferroalloy industry has comprised 
about 35 companies, but 8 of these re- 
corded no production in 1981. Of the 
remainder, 17 collectively accounted for 
over 90% of 1981 output of 10 major fer- 
roalloy types, as indicated in table 2. 



Moreover, one of these firms. Pacific 
Metals Co. Ltd., together with four other 
firms not listed in the table, accounted 
for all ferronickel output, though the 
relative share of total provided by each 
is not available. The four unlisted 
firms are Nippon Yakin Kogyo Co., Ltd., 
Nippon Mining Co., Sumitomo Metal Mining 
Co., and Shlmura Kako Co. Ltd. 



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As in most other market economy na- 
tions, Japan's major ferroalloy producers 
by and large are not major steel produc- 
ers. Of the firms listed in the table, 
only Nippon Kokan KK and Kobe Steel Ltd. 
rank as major integrated steel producers; 
of the ferronickel firms, only Sumitomo 
(through its affiliation with Sumitomo 
Metal Industries) could be regarded as 
connected with a major steel firm. 

PRODUCTION 

As shown in table 3, Japan produces a 
virtually complete range of ferroalloys, 
principally for domestic production of 
alloy steel rather than for the export 
market. In terms of tonnage, the man- 
ganese ferroalloys (f erromanganese and 
f errosilicomanganese) are the largest 
category, accounting for over 49% of 
total output, during 1972-81, inclusive, 
followed by the chromium ferroalloys 
(f errochromium and ferrosilicochromium) 
with nearly 22% of the total for the 
same period. Next in importance, and the 
only other substantial types are ferro- 
silicon, with 16% of the total, and fer- 
ronickel with 12%; all others together 
account for less than 1% of total 1972-81 
output. 

Total ferroalloy production in Japan 
reached a record high in 1974, the year 
after its record high in crude steel 
output level. Ferrochrome, ferrosilicon, 
and ferrosilicomanganese reached maximum 
output levels in 1974; thereafter, their 
production turned generally downward and, 
although there were individual recoveries 
from time-to-time, these ferroalloys did 
not reach new record highs from 1975 
through 1981. Ferromanganese production 
peaked in 1975, then generally turned 
downward, with 1978 being a particularly 
poor year. Unlike the other major ferro- 
alloys, ferronickel output reached a rec- 
ord high in 1979, following a less promi- 
nent peak in 1974. Among the minor 



alloys, the years of record output seem 
less clearly defined. 

TRADE 

Table 4 summarizes Japan's imports and 
exports of ferroalloys during 1972-81. A 
clear shift occurred between the first 5 
years of the decade and the last 5 years: 
Japan changed from a modest net exporter 
to a large net importer. During 1972-76, 
exports (totaling nearly 805,000 tons) 
exceeded imports by 146,000 tons; in con- 
trast, during 1977-81, imports (totaling 
nearly 2,036,000 tons) exceeded exports 
by nearly 1,631,000 tons. 

SUPPLY 

Domestic production of ferroalloys, 
overwhelmingly from imported raw materi- 
als, accounted for 87.5% of total new 
supply (domestic output plus imports) of 
these important materials during 1972-81, 
inclusive. Of these materials, imports, 
although quantitatively substantial, rep- 
resented only a relatively modest share 
of that supply for the decade. A sharp 
shift in the supply pattern began in late 
1977 and resulted in more than doubling 
the import share of the 1978 total. The 
following tabulation shows the percentage 
of the total new supply of ferroalloys 
contributed by domestic production and by 
imports : 

Domestic 



1972.. 


Year 


production 

96.7 
93.4 
92.4 
96.0 
91.8 
90.5 
80.7 
79.1 
79.6 
76.5 


Imports 
3.3 


1973.. 






6.6 


1974.. 






7.6 


1975.. 






4.0 


1976.. 






8.2 


1977.. 






9.5 


1978.. 






19.3 


1979. . 






20.9 


1980.. 






20.4 


1981.. 






23.5 


Weighted 


average. . 


87.5 


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This increasing dependence on the im- 
port of ferroalloys, as opposed to import 
of the ores of these metals, is consid- 
ered to be primarily the result of dif- 
ferences in relative costs of energy for 
production of the ferroalloy and for 
transport of the processed materials. 
These costs reflect the producing coun- 
tries' desire to export value-added 
material. 

Considering those ferroalloys that can 
be clearly identified in both production 
and import statistics, there are substan- 
tial differences in the shares of total 
supply that are met by imports and by 



domestic production, both from commodity 
to commodity and across the 10-year peri- 
od 1972-81. The following tabulation 
demonstrates that, in terms of total new 
supply, ferromanganese, ferronickel, and 
ferrosilicon have been produced chiefly 
in Japan rather than being imported as 
the finished ferroalloy. However, in 
each of these cases, there has been a 
small trend toward increasing the depen- 
dence upon ferroalloy imports in the sec- 
ond half of the decade. The tabulation 
shows domestic production and imports for 
two successive 5-year periods and for 
the 10-year period, in percent of total 
new supply: 





1972- 


76 


1977- 


81 


1972- 


81 


Ferroalloy 


Domestic 
production 


Imports 


Domestic 
production 


Imports 


Domestic 
production 


Imports 


Ffrrnrhrnmi iim *«..**#.* 


91.5 
144.7 
U8.3 
98.6 
71.8 
94.5 
88.5 

67.7 
165.0 

93.9 


8.5 

155.3 

151.7 

1.4 

28.2 

5.5 

11.5 

32.3 
135.0 

6.1 


64.3 
48.8 
44.5 
98.2 
89.6 
90.5 
70.4 

58.5 
75.6 

81.1 


35.7 
51.2 
55.5 

1.8 
10.4 

9.5 
29.6 

41.5 
24.4 

18.9 


70.5 
248.1 
245.2 
98.4 
80.1 
92.3 
80.0 

64.5 
278.6 

87.5 


29.5 


Ferrochromium-silicon. 

Ferrocolumbium 

Ferromanganese 

Ferromolybdenum 

Ferronickel. .......... 


251.9 
254.8 

1.6 
19.9 

7.7 


Ferrosilicon. ......... 


20.0 


Ferrotungsten. ........ 


35.5 


Ferrovanadium. ........ 


221.4 


All ferroalloys 


12.5 



iData for 1976 only (imports not reported separately 1972-75). 
2Data for 1976-81 only (imports not reported separately 1972-75). 



Of these ferroalloys, only ferrosilicon 
is produced chiefly from domestic raw 
materials; output of ferromanganese is 
heavily dependent upon imported ore, and 
ferronickel is wholly dependent upon im- 
ported ore. 

The tabulation further shows that im- 
ports of ferrochromium constituted only 
8.5% of the total new supply during 1972- 
76 but 35.7% during 1977-81. Among the 



less common ferroalloys, import receipts 
of ferrocolumbium, ferrochromium-silicon, 
and ferrotungsten have represented a 
substantial part of total new supply 
throughout 1972-81, generally with the 
share edging higher in the latter half of 
the period. In contrast, ferromolybdenum 
and ferrovanadium showed a measurable 
downturn, when comparing the first 5 
years with the second 5 years. 



10 



Ferrosilicomanganese is the only ferro- 
alloy produced in substantial amounts in 
Japan for which separate import statis- 
tics are not available; consequently, the 
precise share of total supply provided by 
import of the finished ferroalloy cannot 
be determined. The amount of ferrosili- 
comanganese imported could be less than 
10% of the newly available supply for the 
1972-81 decade. 

Exports of ferroalloys from Japan never 
represented a substantial share of new 
supply during 1972-81, averaging only 
5.6% for the entire period, and varying 
between a high of 11.7% in 1975 and a low 



of 2.3% in 1973. Table 4 summarizes 
these exports by type. The United States 
was the principal destination for these 
ferroalloy exports, accounting for over 
half of the total for 1972-81. However, 
these exports are merely a small part of 
Japan's new supply of ferroalloys, and 
are generally declining; the U.S. share 
of the total has also diminished. The 
following tabulation shows the declining 
share of total new supply destined for 
export, the share of total ferroalloy ex- 
ports destined for the United States, and 
the Japanese share of total U.S. ferro- 
alloy imports, in percent: 





Share of Japanese 


Share of total 


Share of total 


Year 


total supply^ of 


Japanese export 


U.S. import 




all ferroalloys 


destined for 


provided by 




exported 


United States 


Japan 


1972 


5.9 


62.6 


8.0 


1973 


2.3 


60.8 


4.8 


1974 


7.2 


66.5 


6.9 


1975 


11.7 


58.1 


20.8 


1976 


9.6 


63.7 


12.6 


1977 


3.8 


48.7 


5.7 


1978 


3.8 


28.7 


1.6 


1979 


5.2 


29.6 


3.1 


1980 


3.0 


25.9 


2.0 


1981 


3.0 


35.3 


1.6 



'Production plus Imports 

CONSUMPTION 

The alloy and specialty steel industry 
of Japan is the principal consumer of 
ferroalloys available to the Japanese 
economy. Consumption data for most of 
these commodities by Japan's steel indus- 
try during 1972-81, inclusive, appear in 
table 5. It is assumed that virtually 
all of the tonnages of ferrochromium and 
f erromolybdenum shown in the table were 
used in the production of stainless 
steels, as were 200,000 to 300,000 tons 
of ferronickel per year (based on appar- 
ent consumption computations, in lieu of 
a reported consumption). The other fer- 
roalloys shown presumably were used in 
producing other types of specialty steel, 
such as electrical steel. 

Significantly, the general trend in 
ferroalloy consumption does not parallel 
the trend in crude steel production. 



Although steel output peaked in 1974, the 
record consumption for ferroalloys oc- 
curred in 1980, totaling 2 million tons 
(includes an apparent consumption of 
290,000 tons of ferronickel). The annual 
configuration by type of steel produced 
changed during 1974-80. In this period, 
a larger percentage of the annual steel 
output was in the form of alloy steel. 
Moreover, production of hot-rolled alloy 
steel reached a new record high in 1981. 

RAW MATERIAL REQUIREMENTS 
AND SUPPLIES 

Chromium 

Salient statistics of chromium are 
shown in table 6. Although Japan has 
produced chromite domestically, the out- 
put in terms of its requirements is 
insignificant . 



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iH 




0) 


(0 


(U 






V 


(U 


•H 




Pi^ 




F^ 


Ps< 




Pm 




Px 


pti 


CO 



12 



TABLE 6. - Salient chromium statistics, thousand tons 





1972 


1973 


1974 


1975 


1976 


1977 


1978 


1979 


1980 


1981 


Raw material supply: 

Domestic production of chromite: 

Gross weight 

Chromium content. .................. 


25 
8 


40 

154 
25 
19 
78 

445 
10 

104 



23 
8 

7 

36 

221 

12 



115 

619 

45 

95 

14 


26 
9 


15 

311 
64 
60 

127 

424 


123 
31 


23 
8 

58 



360 

52 

58 

153 

343 

98 

95 

52 


22 

7 

3 



238 

78 

134 

149 

416 

84 

59 

56 


18 
6 

27 
71 

138 
54 
66 
41 

373 
15 
48 
67 


9 
3 


72 
73 
26 
32 
74 
350 
10 
25 
8 


12 
4 

22 

51 

156 

0) 

62 

184 

443 



16 

28 


14 
4 



18 

170 



32 

208 

407 

27 

39 

49 


11 
4 


Imports: 
Chromite: 

Albania. ......................... 


31 


Brazil 





India 


142 


Iran 





Madagascar 





Philippines 


151 


South Africa, Republic of 

Turkey 

U.S.S.R 

Other 


348 

6 

40 

26 


Total 


875 
1 


1,164 
2 


1,155 
2 


1,269 

1 


1,217 
3 


900 
3 


670 
4 


962 
3 


950 

2 


744 


Chromium oxide and hydroxide 


2 


Ferrochromium: 

Brazil 






14 

V) 



(') 




28 
3 

(') 




34 
5 

(') 




29 





3 


90 







3 

79 

12 



10 


28 

7 

120 





14 


28 

2 

203 





17 


23 

1 

202 

16 

10 

5 


28 


India 


4 


South Africa, Republic of 


126 
3 


Zimbabwe 


21 




8 






Total 


14 


31 


39 


29 


93 


104 


169 


250 


257 


190 


South Africa, Republic of 


(2) 
(2) 
(2) 


(2) 

(2) 
(2) 


(2) 
(2) 
(2) 


(2) 
(2) 
(2) 


9 


4 


5 



6 






23 

(') 


10 

10 

3 


2 
7 


Other 


1 


Total 


(2) 
400 

NA 
NA 


(2) 
500 

984 
144 


(2) 
530 

1,049 
224 


(2) 
580 

966 
282 


14 
600 

848 
338 


5 
460 

774 
107 


6 
400 

523 
199 


23 
580 

648 
295 


23 
570 

798 

NA 


10 


Approximate chromium content of all 
imports® 


450 


Processing: 

Use of chromite: 

In ferroalloy and iron and steel 


594 


In chemical, refractory, and other 
industries^ 


NA 


Production of ferrochromium: 


224 
79 


357 
86 


451 
91 


387 
99 


374 
90 


353 
46 


241 
33 


321 
44 


350 
53 


266 


Low-carbon 


90 


Total 


303 

28 

2 


2 


443 

16 

2 

(') 
2 


542 

15 

2 

(') 

1 


486 

25 

3 

(') 
1 


464 

11 

2 

2 

1 


399 

11 

3 

3 
2 


274 
9 
3 

2 
2 


365 

13 

3 

2 
2 


403 

21 

4 

6 
3 


306 


Production of ferrochromlum-silicon 

Production of chromium metal 

Exports: 

Chromite. ............•••...•....•..•• 


10 
4 

1 


Chromite oxide and hydroxide 


2 


To United States. 


18 
5 


12 

5 


31 
27 


57 
28 


32 
23 


5 
11 


2 
4 


2 
18 


3 
6 


1 




2 


Total 


23 


17 


58 


85 


55 


16 


6 


20 


9 


3 



NA Not available. 

® Estimated. 

'Less than 1/2 unit. 

^Not reported separately. 

^Calculated by subtracting reported industry 



figure from reported total. 



13 




Total reserves of chromlte in Japan 
were estimated at 325,500 tons averaging 
32% Cr203 in 1979, of which about 39% 
represented demonstrated reserves. The 
deposits occur mainly in the Iburi and 
Hidaka districts of southern Hokkaido, 
and in the Chugoku region of western Hon- 
shu; a small chromite placer deposit oc- 
curs in northern Hokkaido. Up to 11 
mines have operated in these areas at 
various times . 

The peak production of chromium in 
Japan occurred in 1939 when military 
needs required mine production from sub- 
marginal domestic resources. Production 
dropped to 2,400 tons in 1947, but then 
rose intermittently, reaching a high of 
70,000 tons in 1961. Since then, there 
has been a downward trend in mine out- 
put as reserves were depleted and as min- 
ing costs rose. In 1981, three mines 
(Hirose, Wakamatsu, and Takase) produced 
a total of about 11,000 tons of chromium 
concentrate. This ore supplied less than 
2% of the domestic demand for chromium. 

Japan's requirements for chromium are 
met principally by iiiq)orts of chromite as 
well as ferrochromium. The latter is al- 
so produced in Japan from imported ore. 
High-carbon ferrochromium dominates Ja- 
pan's production. Of the 306,000 tons of 
ferrochromium production in 1981, 87% was 
high-carbon and 13% low-carbon. The in- 
crease in imports of ferrochromium has 
idled some of domestic production. At 
least one ferrochromium producer went out 
of business in 1977. 

Two companies produce chromium metal 
in Japan: Toyo Soda Manufacturing Co., 
which has a 3,600-ton-per-year capacity, 
and Nippon Denko (700 tons per year). 
From 60% to 70% of Japanese chromium met- 
al production is usually exported, prin- 
cipally to the United States and Western 
Europe. Because of extensive metallurgi- 
cal uses, the total annual quantity im- 
ported varies directly with demand in the 
steel industry. During the past two dec- 
ades, a high of 1,269,000 tons of chro- 
mite was imported in 1975 and a low of 
670,000 tons was imported in 1978. 
Principal sources of chromite imports are 
shown in table 6. In 1981 imports were 



predominately from the Republic of South 
Africa, followed by the Philippines and 
India; these countries accounted for over 
86% of Japan's chromite imports. Much of 
the chromite imported from the Philip- 
pines is refractory grade. 

Japan's imports of chromium ore are be- 
ing replaced increasingly by those of 
ferrochromium. These imports increased 
from 29,000 tons in 1975 and 104,000 tons 
in 1977 to peak imports of 257,000 tons 
in 1980. Twelve countries have supplied 
Japan with ferrochromium, but the major 
source has been South Africa, with Brazil 
ranking second in recent years. 

Chromite is used in the production of 
ferrochromium, which is used for making 
stainless steel; a smaller tonnage is 
used for making other types of specialty 
steel and alloys. Other users are the 
chemical industry (pigments, leather tan- 
ning, and electroplating) and the refrac- 
tory industry (for basic furnace lining). 
The metallurgical industry's consumption 
of chromium is about one and a half times 
consumption of all other uses combined. 
Stainless steel production accounts for 
about 70% of contained chromium used by 
the metallurgical industry. Japan is a 
leading world producer of stainless 
steel, with a production of over 1.8 mil- 
lion tons in 1980 and 1.54 million tons 
in 1981. 

Cobalt 

Japan has an annual refinery capacity 
for production of 2,800 tons of cobalt. 
To meet demands , some cobalt is recovered 
as a byproduct of domestic ore processing 
by Sumitomo Metal Mining Co. Ltd. and by 
Nippon Mining Co. Ltd. An additional 
supply comes from the recovery of cobalt 
by Mitsubishi Metals Corp. from copper 
sulfide ores at the Hokkaido plant of 
Shimkawa Mining. About 75% of the refin- 
ery output of cobalt is estimated to be 
from imported material; the remainder 
comes from domestic ore. About 20% of 
the cobalt from overseas sources is toll 
refined and exported; the rest is sold 
and shipped to domestic purchasers such 
as the electronics industry and specialty 
steel producers. 



14 



Imports of cobalt oxide, hydroxide, 
metal, and other forms are shown in table 
7. Until the mid-1970' s, Japan imported 
about 90% of its cobalt metal require- 
ments from Zaire (includes that metal 
credited to Belgium in table 7). In 
most cases, cobalt was imported by a Jap- 
anese trading company, which negotiated 
long-term contracts with Societe G^nerale 
des Mineraux (SGM) of Belgium. Since 
1976, Japan has increased its production 
of cobalt by importing mixed nickel- 
cobalt sulfide from Australia and the 
Philippines and refining it domestically 
(by Sumitomo Metal Mining Co. Ltd. and 
Nippon Mining Co. Ltd.). In terms of re- 
covered metal content, the Philippines 
has been the most important source. 
Japan's imports of nickel- and cobalt- 
bearing ores, concentrates, mattes, and 
sulfides, and principal sources of supply 
for 1972-81 are tabulated in the section 
on nickel. 

In 1981, Japan produced 2,421 tons of 
refined cobalt, imported 868 tons, and 
exported an estimated 400 tons. Con- 
sumption was 1,511 tons; peak consump- 
tion was 3,924 tons in 1973. Magnetic 
alloys, of which aluminvmi-nickel-cobalt 
alloys represent the largest composition 
type, account for nearly 30% of total 
domestic consumption of cobalt. About 
18% of consumption is in specialty steel 
(e.g., high-speed and heat-resistant 
alloys); 10% in ultrahard alloys; 7% in 
catalysts; 20% in manufacturing pipe, 
sheet, bar, and wire for machinery and 
transport equipment industries; and the 
remaining 15% in chemical and other 
industries. 

Cobalt consumption in Japan has de- 
clined annually since 1976. The decline 
was attributed to higher prices rather 
than lack of supply. End-use sectors 
showing a marked decrease in consumption 
of cobalt were those of specialty steel 
and magnets, resulting from substitution 
and use of less cobalt in finished mate- 
rials. There was however, a significant 
constancy in the consumption of cobalt in 
ultrahard machine tools, catalysts, and 
unspecified, distributive, and/or dissi- 
pative applications. 



Manganese 

Japan's manganese resources are not 
large by world standards. The aggregate 
sources of metallurgical-grade ore, from 
a number of widely separated sites, are 
on the order of 3 million tons, contain- 
ing 658,000 tons of recoverable manga- 
nese. Battery- and chemical-grade ore 
reserves probably total 40,000 to 50,000 
tons of recoverable manganese content. 
Ore quality and reserves are of marginal 
value, causing mines to close periodical- 
ly in response to market conditions. As 
a result, domestic mines have supplied 
only a small percentage of Japan's total 
needs. 

Production of manganese was first re- 
ported in 1902 and increased slowly to 
356,000 tons of concentrates in 1944. 
Production has declined steadily, from 
339,000 tons in 1967 to about 87,000 
tons in 1981. The average crude ore 
grade has declined to about 14% manga- 
nese. Small amounts of higher quality 
material have been mined and concentrated 
for use in the dry-cell and chemical 
industries. Several companies have re- 
ported production in varying amounts from 
different mines. In 1981, three domes- 
tic companies produced manganese ore: 
Chuugnai Mining Co. Ltd. , Hama Mining Co. 
Ltd. , and Hokushin Mining Co. Ltd. 

Japan depends almost entirely on im- 
ports of manganese ore for its steel in- 
dustry. It is estimated that the Japa- 
nese steel industry absorbs 8% of the 
world's mine output of manganese ore. 
Japan's imports of manganese ore and oth- 
er manganese-bearing materials for 1972- 
81 are shown in table 8. In the early 
1960's, Japan imported annually about 
400,000 tons of manganese ore. As its 
iron and steel industry expanded, imports 
of manganese ore and ferruginous manga- 
nese ore increased to about 1 million 
tons in 1965 and to almost 4 million tons 
by 1975. Although more than 16 countries 
have supplied manganese ore to Japan 
during 1972-81, in the last 5 years, Aus- 
tralia and the Republic of South Africa 
have accounted for 72% to 82% (excluding 
ferruginous manganese ore) . 



TABLE 7. - Salient cobalt statistics, tons 



15 





1972 


1973 


1974 


1975 


1976 


1977 


1978 


1979 


1980 


1981 


Imports: ' 

Cobalt oxide: 

Belgium 


586 

12 



4 


785 
6 

3 


726 

(2) 
5 


204 

(2) 



616 
18 
26 
14 


406 
52 
28 
16 


435 
52 
20 
21 


477 
31 
23 
15 


150 

8 

14 

21 


90 


Canada 


20 


United States 


4 


Other 


19 


Total 


602 


794 


731 


204 


674 


502 


528 


546 


193 


133 


Cobalt hydroxide: 

Belgium ...........••••••••••••• 


82 



149 



81 

7 


46 
2 


73 

7 


79 
16 


87 



105 



99 



79 


Other 


15 


Total 


82 


149 


88 


48 


80 


95 


87 


105 


99 


94 


Unwrought cobalt metal: -^ 

Belgium 


366 

136 

215 

2,049 



58 


328 
100 
823 
3,626 

113 


389 
121 
105 
2,914 

132 


120 

42 

41 

1,272 



57 


236 
90 
165 
2,658 
482 
203 


540 

117 

48 

1,011 

6 

143 


290 
88 
82 

679 

1 

97 


329 
53 

102 

749 
20 

132 


464 
43 
169 
672 
5 
129 


246 


Finland 


96 


United States 


139 


Zaire ••.......••...•••••••••••• 


210 


Zambia ••.••• 


13 


Other 


177 


Total 


2,824 


4,490 


3,661 


1,532 


3,834 


1,865 


1,237 


l,385j 


1,482 


868 






Waste and scrap cobalt: 

United States 


82 
42 


123 
22 


27 



32 
16 


64 
33 


89 
129 


49 
65 


172 
112 


166 

44 


166 


Other 


40 


Total 


124 


145 


27 


48 


97 


218 


114 


284 


208 


206 


Wrought cobalt : '^ 

United States 


2 
2 


16 
6 


25 
3 


1 

(2) 


1 

(2) 


1 
1 


7 

(2) 


6 
2 


5 
3 


5 


Other 


2 


Total 


4 

3,460 



5 



22 

5,350 



16 



28 

4,330 

10 

12 



1 

1,810 

48 

12 



1 

5,010 

515 

11 
(2) 


2 
3,620 
1,093 

10 



7 
3,670 
1,864 

87 

1 


8 
4,810 
2,653 

41 
2 


8 
4,770 
2,867 

85 



7 


Estimated cobalt content of all 
imports ^ 


3 670 


Processing: Production of cobalt 
metal 


2 421 


Exports:^ 

Cobalt oxide and hydroxide 
exports: 
Total 


13 


To United States 









Cobalt , unwrought , including 
waste and scrap: 
To France 






20 






2 














1 







21 








25 




5 

12- 

195 

1 


23 

94 

305 

5 


157 

275 

564 

44 


99 


To Germany, Federal Republic of 
To United States 


75 
737 


Other^ 


NA 


Total 


20 


2 





1 


21 


25 


213 


427 


1,040 


911 



NA Not available. 

The principal crude source of cobalt metal recovered in Japan is cobaltiferous nickel ore; 
lesser amounts may be recovered from cobaltiferous copper ores. For data on imports of cobalt- 
iferous nickel ore, see table 9. Additional cobalt undoubtedly is imported in nickel matte, and 
other intermediate nickel metallurgy, but the cobalt content of imported matte is not available, 
nor can it be reliably estimated from available information. 

2Less than 1/2 unit. 

^Includes powder and flake. 

^Includes unknown quantities of not specifically identified "oxides of cobalt" for 1976-81, 
inclusive. 

Includes figures for estimated recoverable content of imported and domestically produced 
cobaltiferous ores and intermediate metallurgical products; these estimates are based on Japa- 
nese metal production, which began in 1974. 

Japan does not record separately its exports of cobalt metal; data presented here for cobalt 
metal are recorded imports from Japan by listed trading partner countries. 

^Belgium-Luxemburg, Denmark, Ireland, Italy, the Netherlands, and the United Kingdom only. 



16 



TABLE 8. - Salient manganese statistics, thousand tons 





1972 


1973 


1974 


1975 


1976 


1977 


1978 


1979 


1980 


1981 


Raw material supply: 

Manganese ore production: 

Gross weight 

Mn content 


261 
72 


189 
53 


167 
42 


158 
39 


142 
33 


126 
33 


104 
29 


88 
23 


80 
21 


87 
21 


Imports: 

Manganiferrous iron ore: 

India. 


61 




29 
18 


36 
99 


22 
70 


11 
11 


26 



16 
27 


7 







18 


South Africa, Republic of 





Total 


61 


47 


135 


92 


22 


26 


43 


7 





18 


Ferruginous manganese ore: 

China 


14 

657 

615 





48 


30 

651 

840 





38 


44 

811 

1,001 



101 

53 


41 

641 

904 

6 

143 

36 


32 
536 
799 
20 
90 
41 


45 
523 
704 
66 
89 
20 


38 

483 

383 

48 






39 

459 

520 

40 






16 

516 

538 

37 






16 


India. 


390 


South Africa, Republic of.......... 


532 


Thailand 


22 


U.S.S.R 

Other ' 










Total 


1,334 


1,559 


2,010 


1,771 


1,518 


1,447 


952 


1,058 


1,107 


960 






Australia 



2 

1 
5 
9 



(2) 






2 
4 
8 
8 


(2) 
1 
8 
2 

(2) 




1 

2 

1 


4 
3 
2 
2 

1 


4 
3 
4 
2 
(2) 


5 
3 
2 
2 
(2) 


11 

3 

8 

(2) 

5 


4 


China 


2 


Gabon 


4 


Indonesia. 





Other 


1 


Total 


17 


(2) 


22 


11 


4 


12 


12 


12 


27 


11 


Other manganese ore: 

Australia. ......................... 


506 

45 

22 

1 

248 
23 
65 
45 

461 
71 
32 
50 


626 

29 

9 

4 

208 
18 
44 
60 

636 
54 
64 
64 


652 
22 
11 
20 

113 
54 
33 
94 

682 
20 

116 

116 


655 

54 

3 

7 

166 

47 

29 

130 

703 

15 

134 

134 


804 

42 

4 

14 

207 
19 
29 

129 

467 
11 
39 
57 


500 

42 

2 

53 

70 

10 

20 

103 

420 

18 

25 

31 


444 

51 

2 

28 

60 

25 



75 

310 

25 

22 

6 


544 

162 

2 

16 

122 

31 



73 

660 



10 

2 


602 

149 

3 

21 

150 

46 

3 

80 

761 

3 
2 


429 


Brazil 


HI 


China 

Congo 

Gabon. ............................. 


1 



58 


Ghana. ............................. 


25 


India. ............................. 





Mexico 


67 


South Africa, Republic of 


829 


U.S.S.R 

Vanuatu 






Other 


2 


Total 


1,569 


1,785 


1,876 


1,958 


1,834 


1,294 


1,048 


1,622 


1,820 


1,522 


Ferromanganese : 

India 



(2) 


22 
(2) 


16 




2 



2 


5 
1 


15 
2 


12 

7 


2 

1 


3 


Other 


4 


Total 


(2) 
1,080 


22 
1,240 


16 
1,440 


2 
1,380 


2 
1,230 


6 
990 


17 
750 


19 
1,020 


3 
1,110 


7 


Estimated manganese content of all 
imports 


940 


Processing: 

Production of ferromanganese: 


439 
114 


479 
138 


493 
131 


515 
135 


485 
147 


399 
128 


368 
88 


449 
154 


452 
117 


450 


Low-carbon 


118 




553 

343 

13 

3 


41 
4 

50 
38 


617 

376 

10 

2 


39 
2 

26 
17 


624 

448 

9 

5 

1 

36 
2 

54 
39 


650 

435 

8 

4 


23 
1 

131 
86 


632 

373 

7 

6 



34 
3 

129 
91 


527 

334 

7 

5 


24 
4 

49 
30 


456 

303 

6 

5 


22 
4 

37 
(') 


603 

300 

4 

6 


19 
3 

88 
31 


569 

311 

4 

2 


23 
6 

40 
12 


568 


Production of ferrosllicon manganese. 
Exports: 

Total 


283 

4 

1 







Manganese dioxide: 

Total 


27 


To United States 


12 


Ferromanganese: 

Total 


35 


To United States 


7 



'All from Malaysia except 23,000 tons in 1972 from Romania. 
2Les8 than 1/2 unit. 



17 



High-grade il]^)orted manganese ore is 
used for the production of ferromanganese 
and silicomanganese. Consumption for 
this purpose is about 1.4 million tons 
annually. Between 500,000 and 600,000 
tons of ferromanganese and about 300,000 
to 400,000 tons of silicomanganese were 
produced annually in the 1970' s. Of the 
total ferromanganese produced during 
1973-81, about 78% was high-carbon and 
22% was low-carbon ferromanganese. A 
small tonnage of ferromanganese is also 
imported, mainly from India. 

Ferruginous manganese ores, which are 
also imported in large tonnages, are 
ores with 10% to 30% manganese and a 
high iron content. Most of the ferrugi- 
nous ores are used in blast furnaces in 
the production of pig iron, with only 
a small portion used as raw material 
for ferroalloy plants. India and South 
Africa together have supplied 90% to 95% 
of this material since 1975. During the 
1970's, Japan's iron and steel industry 
consumed annually about 1.4 million tons 
of ferruginous manganese ore as direct 
blast furnace feed and raw material for 
making sinter. During 1973-79, about 
half of the total ferruginous manganese 
ore consumed was used for sinter feed; 
the remainder went directly to blast 
furnace. 

About 95% of Japan's total demand for 
manganese is by the iron and steel indus- 
try. High-grade manganese ore is used 
for the production of refined ferromanga- 
nese (high-carbon and low-carbon) . Ja- 
pan' s steel industry consumed an annual 
average of about 600,000 tons of ferro- 
manganese and about 300,000 to 400,000 
tons of ferrosilicomanganese during 1972- 
81 (491,000 tons of contained manganese 
in 1981). Each ton of crude steel con- 
sumes an average of 3.76 kg of high- 
carbon ferromanganese, 0.75 kg of medium- 
and low-carbon ferromanganese, and 3.31 
kg of ferrosilicomanganese. The world 
recession that followed the oil crisis in 
1973-74 resulted in cutbacks in steel 



production and, consequently, a decline 
in ferroalloy consumption. 

Japan consumes between 60,000 and 
90,000 tons of high-grade manganese ore 
annually for the production of electro- 
lytic manganese, which is used to make 
specialty steel and to make manganese 
dioxide for the manufacture of dry-cell 
batteries. Only a few ores can be used 
for making dry-cell batteries, and high 
manganese content alone does not make 
the ore suitable. Although a small 
percentage of Japanese ore has the re- 
quired properties for benef iciation into 
battery-grade material, Japan is depen- 
dent on imports for this material. Four 
companies reported an aggregate produc- 
tion of 44,295 tons of electrolytic man- 
ganese dioxide in 1981. 

Japan's annual capacities for manga- 
nese ferroalloys and dioxide in 1981 were 
ferromanganese 941,900 tons, silicoman- 
ganese 597,200 tons, and manganese di- 
oxide 52,800 tons. Principal domestic 
firms producing ferromanganese and sili- 
comanganese are listed in table 2. Pro- 
ducers of manganese dioxide include Toyo 
Soda Industries Co. Ltd. (24,000-ton- 
per-year capacity), Mitsui Mining Smelt- 
ing Co. Ltd. (19,200-ton-per-year capac- 
ity), Japan Metal and Chemical Industries 
Co. (6,000-ton-per-year capacity), and 
Dai-ichi Carbon Co. (3,000-ton-per-year 
capacity). 

Japan's production of electrolytic man- 
ganese metal in the 1972-81 decade has 
ranged from a high of 12,657 tons in 1972 
to a low of 4,232 tons in 1981. Current- 
ly, two firms produce the metal: Chuo 
Denki Kogyo Co., which sells the metal 
only in the domestic market, and Toyo 
Soda Co., which sells both domestically 
and overseas. Exports of the metal ac- 
counted for over 60% of the production in 
1978 but only 4% in 1981. The United 
States is the principal market; other im- 
porting countries are Brazil, France, the 
Federal Republic of Germany, and Canada. 



18 



Nickel 

Japan is a major world consumer of 
nickel. All consumption requirements 
are met by imports of nickel ore, nick- 
el matte, nickel-cobalt mixed sulfides, 
nickel oxide, ferronickel, and nickel 
metal (including scrap). In^)orts of 
these commodities in the 1972-81 dec- 
ade are shovm in table 9. The combined 
total of the annual imports for 1972- 
81 are 3 to 4 million tons of nickel 
ore from Indonesia, New Caledonia, and 
the Philippines; 13,000 to 52,000 tons 
of nickel matte, speiss, and other in- 
termediate products from Australia, In- 
donesia, and New Caledonia; and 8,000 
to 19,000 tons of ingots, 7,000 to 
33,000 tons of ferronickel, and small- 
er tonnages of other forms from vari- 
ous countries. The ores are used for 
making ferronickel; other forms (matte, 
speiss, and other intermediate products) 
are used for making the metal. Jap- 
an's production of ferronickel and metal 
for 1972-81 is shown in table 9. The 
production of ferronickel has varied 
between 200,000 and 300,000 tons (gross 
weight) and production of nickel met- 
al has been about 24,000 tons per year. 
The producers of ferronickel were list- 
ed previously under Industry Structure; 
nickel metal was produced by Sumitomo 
Metal Mining Co. and Nippon Mining 
Co. Ltd. , with an annual capacity of 
22,780 tons and 4,100 tons, respective- 
ly. These two companies accounted for 
the 23,800 tons of nickel produced in 
1981. 

In 1981, ferronickel consumption to- 
taled about 258,000 tons (gross weight). 
About 90% of the total ferronickel sup- 
ply was used indigenously for the pro- 
duction of stainless and other alloy 
steels; most of the remainder was export- 
ed. In 1981, a total of 1.5 million tons 
of stainless steel was produced, of which 
1 million was nickel-based stainless. 



The about 34,000 tons of nickel metal 
consumed in 1981 was distributed as 
follows: specialty steel, 38%; plat- 
ing, 20%; nonferrous alloys, 17%; mag- 
netic materials, 7%; and other uses, 
18%. To supplement domestically pro- 
duced nickel, Japan also imported about 
19,000 tons of nickel metal and powder, 
principally from Canada, the U.S.S.R., 
Australia, the Philippines, the United 
States, Zimbabwe, Norway, and six other 
countries. 

Tungsten 

Salient tungsten statistics for 1972- 
81 are shown in table 10. Currently, 
domestic mine production of tungsten 
accounts for about 25% of Japanese tung- 
sten consumption. The balance is met 
by imports of concentrate, ferrotung- 
sten, and metal. In 1981, Japan con- 
sumed about 3,200 tons of concentrate 
for producing ferrotungsten and the 
metal. 

Japan uses tungsten in the form of 
metal and carbide for the production 
of ultrahard alloys and for making 
cutting and wear-resistant materials; 
about 1,500 tons of tungsten was con- 
sumed in these applications in 1981. 
About 15% of the total tungsten con- 
sumption was as ferrotungsten as a steel- 
alloying element. Domestic mine pro- 
duction of tungsten has decreased an- 
nually since 1977, but consumption has 
increased. 

Domestic consumption accounts for the 
bulk of the total supply of tungsten 
metal; during 1972-81, slightly less 
than 12% of total supply (imports plus 
domestic production) was exported as 
elemental tungsten. The proportion of 
ferrotungsten supply used indigenous- 
ly cannot be pinpointed because fer- 
rotungsten exports are not reported 
separately. 



TABLE 9. - Salient nickel statistics, thousand tons 



19 





1972 


1973 


1974 


1975 


1976 


1977 


1978 


1979 


1980 


1981 


Imports: 
Ore: 

Australia. ............... 


81 

39 

784 

2,246 

2 




67 

17 

730 

2,720 

3 




60 



792 

3,363 

3 




'33 



872 

2,492 

(2) 

(2) 






812 

2,635 

3 

(2) 





878 
2,680 

393 






822 
1,545 

632 







1,128 

2,128 

759 








1,310 

2,000 

640 







Canada. ............•••••• 





Tndonfsia. ............... 


1,162 


New Calendonia. ......•».. 


1,662 


Philippines 


638 


Other 





Total 


3,152 


3,539 


4,218 


3,397 


3,450 


3,951 


2,999 


4,015 


3,950 


3,463 


Matte, speiss, other inter- 
mediate products: 
Australia. ............... 




10 



3 


7 

19 

4 


18 

17 

5 


17 
8 


2 


28 

13 



4 


31 
8 

2 


22 

7 

1 


24 
(2) 
10 
8 


20 
(2) 
27 
5 


16 


Canada. .................. 





Indonesia. ............... 


19 


Other^ 


2 


Total 


13 


2 


30 
(2) 

1 


40 


1 


27 
(2) 

2 


45 
(2) 

5 


41 
(2) 

4 


30 
(2) 

4 


42 

1 

2 


52 
2 

2 


37 


Nickel oxide. .••.....•..... 


1 


Nickel and nickel alloy 
s crap 


2 


Nickel ingot: 

Australia. 

Canada. ...•..•...•.•..•.. 


(2) 
3 

4 
5 


(2) 
5 

5 
4 


1 — ■ - 

(2) 

5 

4 

7 


1 
3 
(2) 
2 
2 


2 

1 

1 

3 
5 


4 
1 
1 
2 
3 


2 
2 
1 
2 
4 


3 

5 
1 
4 
6 


2 
4 
2 
2 
5 


3 
5 


Philippines 


2 


U.S.S.R 

Other 


3 
5 


Total 


12 


14 


16 


8 


12 


11 


11 


19 


15 


18 


Ferronickel: 

Dominican Republic 

Indonesia. ............... 




3 
1 
3 


4 

5 

1 
2 


5 



10 

1 
2 


1 

5 
1 
3 


2 
6 

3 
3 


4 
9 

5 
1 
1 


7 
11 

1 
1 



10 

11 

9 

2 

1 


9 

10 
11 

1 



4 
9 


New Caledonia. .......•.•* 


13 


United States 


(2) 


Other 





Total 


7 


12 


18 


10 


14 


20 


20 


33 


31 


26 


Estimated nickel content 
of all imDorts ....•..•.•.. 


85 

189 
16 

79 

19 


(2) 




100 

200 
22 

88 

(2) 


(2) 



120 

251 
21 

105 

2 
2 

1 
(2) 


90 

201 
13 

78 

4 
(2) 

1 

1 


110 

198 
24 

95 

13 
(2) 

2 
2 


115 

224 
24 

94 

2 


4 

1 


95 

198 
22 

80 

22 
17 

3 
(2) 


125 

304 
25 

101 

13 

4 

2 

1 


130 

277 
25 

99 

17 
3 

1 

1 


110 


Processing: 

Ferronickel production 
(sross weisht) ............ 


244 


Metallic nickel production. 
Nickel content of ferro- 
nickel produced. •..*.••.•• 


24 
87 


Exports: 

Ferronickel: 

Total 


21 


To United States 


15 


Ni ckel , unwr ought : 

Total 


1 


To United States 


(2) 



' Includes 25 ,000 tons credited to New Zealand in source, but almost certainly of Aus- 
tralian origin, plus 8,000 tons credited to Australia, 

^Less than 1/2 unit. 

^All from New Caledonia except 3,000 tons in 1979 and less than 500 tons in 1980, from 
Guatemala. 



20 



TABLE 10. - Salient tungsten statistics, tons 





1972 


1973 


1974 


1975 


1976 


1977 


1978 


1979 


1980 


1981 


Raw material supply: 
Tungsten concentrate 
production: 

Gross weight 

Tungsten content.... 


1,554 
898 


1,510 
869 


1,398 
810 


1,330 
768 


1,372 
814 


1,315 
772 


2,192 
775 


2,253 
746 


1,894 
667 


1,901 
667 


Imports: 

Tungsten concentrate 
(gross weight) : 
Australia 


119 

41 

160 

141 

1,220 

397 



283 





75 


519 
69 

790 

263 
1,473 

301 
30 

842 


130 

146 


274 

76 

386 

288 

1,161 

484 

499 

494 



80 

76 


221 

18 

90 

169 

927 

212 

144 

186 



60 




313 

18 

151 

105 

855 

378 

60 

540 

127 

30 

28 


514 

108 

347 

178 

949 

414 

139 

480 



71 

47 


221 
99 

408 
50 

901 

290 
79 

175 

10 

30 

1 


284 

194 

468 

215 

815 

386 

89 

186 

380 

20 

96 


557 
299 
675 
165 
733 
227 
355 
244 
101 
30 
94 


336 


Bolivia 


280 


Canada. ........... 


180 


China 

Korea, Republic of 
Peru 


276 
507 
137 


Portugal • 


468 


Thailand 


48 


United States 

Zaire 






Other 


24 


Total. . / 


2,436 


4,563 


3,818 


2,027 


2,605 


3,247 


2,264 


3,133 


3,480 


2,256 


Ferrotungsten (gross 
weight) : 
Austria. 


2 


13 
9 

53 


230 

20 



157 

191 


2 


19 
194 

16 








91 

30 


177 



147 

163 

68 


138 

6 



50 

15 


57 

61 








255 

158 

10 

60 




51 
67 
28 
23 
17 





Brazil 


5 


China 


24 


Portugal 

Other 


16 




Total 

Tungsten metal: ' 
Austria. .......... 


77 


598 


231 


121 


555 


209 


118 


483 


186 


45 


4 
19 

26 
(2) 
9 
2 


5 
47 

73 

1 

119 

1 


11 
48 

100 
1 

172 
4 


3 

7 

1 
(2) 
11 
(2) 


5 
4 

1 
85 

7 
4 


5 
2 

1 
87 
13 

4 


6 
5 

9 
85 
14 

8 


12 
3 

7 

112 

23 

4 


11 

1 

13 

111 

16 

6 


16 


France ............ 


1 


Germany, Federal 

Republic of 

Korea, Republic of 

United States 

Other. 


14 

139 

16 

1 


Total 

Estimated tungsten 
content of all 
imports 


60 

1,700 

611 
1,358 

270 
15 


246 

3,700 

934 
2,018 

96 

7 


336 

3,000 

276 
1,665 

138 
25 


22 

1,400 

494 
885 

200 
64 


106 

2,200 

447 
1,431 

190 
50 


112 

2,400 

371 
1,549 

136 
33 


127 

2,700 

243 
1,479 

178 
24 


161 

2,600 

251 
1,736 

265 
43 


158 

2,600 

242 
2,049 

311 
61 


187 
1,700 


Processing: 
Production of 

ferrotungsten 

Production of tungsten 
metal 


362 
1,820 


Exports: ' 

Tungsten metal: 

Total 


309 


To United States.... 


73 


^Includes waste, scrap, 
^Less than 1/2 unit. 
■'Exports of ferrotungst 
not be reported separatel 


powdei 
en are 

■y. 


:, flaV 
report 


ce, in^ 
:ed wit 


jots, £ 
:h othe 


ind art 
ir mine 


:icles 
)r fen 


of tur 
roallo) 


igsten. 
TS , and 


I thus 


5 can- 



21 



STATUS OF THE SPECIALTY STEEL INDUSTRY 



PRODUCTION 

Production of specialty steel during 
1970-81, inclusive, is tabulated in table 
1. Production of this steel as a per- 
centage of total steel output has shown 
an increasing trend. In 1981, Japan pro- 
duced 13.3 million tons of specialty 
steel, of which 1.5 million tons was 
stainless. The configuration of produc- 
tion by type and shape in 1981 are shown 
in tables 11 and 12. 

CONSUMPTION 

Much of the specialty steel produced in 
Japan is used domestically. Compared 
with the production range of 7.2 million 
to 13.3 million tons during 1972-81, con- 
sumption ranged from 5.3 million to 7.3 
million tons during the same period. 
Consumption by type of specialty steel, 
totaling 7 million tons in 1981, is shown 
in table 13. The following tabulation 
shows total domestic consumption of hot- 
rolled specialty steel during 1972-81, in 
thousand tons: 



1972 


5,301 


1977 


5,900 


1973 


6,579 


1978 


6,347 


1974 


6,136 


1979 


6,923 


1975 


4,711 


1980 


7,278 


1976 


5,673 


1981 


7,122 



TRADE 

Japan is an important exporter of spe- 
cialty steel. Exports for 1973-81 are 
shown in table 14. The peak export was 
in 1977 and has gradually declined since 
then. During this period, it appears 
that about 15% of total Japanese produc- 
tion of these steels was exported as 
steel semimanufactures (bars, rods, an- 
gles, shapes, sections, plates, sheets, 
hoops, strips, rails, single-strand 
wires, pipes, and tubes). Exports as a 
percentage of production may have an 
error of plus or minus two percentage 
points because classification differences 
do not allow precise comparison between 
production and exports. The breakdown of 
these exports in 1981, excluding pipes 
and ingots , was as follows , in thousand 
tons: 



Type 
Tool 


Quantity 
38.6 


Structural. ................... 


326.4 


Stainless and heat-resistant 
steel. •...........••••.••.... 


460.7 


Other 


800.2 



Total 1 ,625.9 

Specialty steel pipe exports totaled 
320,700 tons in 1981, including 64,500 
tons of stainless steel pipe and 256,200 
tons of other specialty steel pipe. 
Excluding pipe, the largest export des- 
tinations for stainless and other alloy 
steels in 1981 were the U.S.S.R. (296,000 
tons), the United States (283,000 tons), 
the Republic of Korea (217,000 tons), 
Taiwan (155,000 tons), India (91,000 
tons), and Thailand (75,000 tons). 

TABLE 11. - Production of hot-rolled 
specialty steel, by type, thousand 
tons 



Type 



Tool steel: 

Carbon 

Alloy 

High-speed. 

Vacutim 

Other 

Total. 



Structural steel: 

Carbon 

Alloy 

Total 



Other specialty steel; 
Stainless: 

Chromium-based. . . . 

Nickel-based 

Total 

Spring 

Bearings 

Heat-resistant 

Free-cutting , 

Wire rods 

High-strength , 

Other 

Total 

Grand total. . . . 



1981 



119.2 


83.5 


15.1 


4.6 


.8 


223.2 


2,747.3 


3,296.6 


6,043.9 


524.9 


1,103.6 


1,538.5 


621.1 


570.4 


45.2 


888.3 


340.4 


2,958.5 


51.4 


7,013.8 


13,280.9 



22 



TABLE 12. - Production and sales of specialty steel semimanufactures in 1981, 
thousand tons 





Shapes 


Bars 


Tubes 


Wire 
rod 


Plates 


Strips 
and hoops 


Total 


Production. . . . 
Sales 


215.4 
198.6 


4,208.6 

3,924.8 


2,337.0 



2,454.5 
2,321.3 


2,491.8 
1,360.4 


1,573.6 
750.4 


13,280.9 
8,555.5 



TABLE 13. - Consumption of specialty 
steel in 1981, by type, thousand tons 



Commodity 


Quantity 


Tool steel 


173.9 


Structural steel: 

Carbon and machine. .......... 


2,165.6 


Alloy 


1,308.1 






Total 


3,473.7 






Other specialty steel: 
Stainless: 

Chromium— based. 


219.8 


Nickel— based 


447.9 


Pipe 


48.8 


Total 


716.5 


Serine 


424.9 


Bearings 

Heat— resistant 


393.5 
23.6 


Free— cutting 


696.8 


Wire rods 

High-strength 

Corrosion-resistant : 


303.2 
454.6 

176.5 


Seawater 


3.2 


Low-temperature 

Other 


81.2 
18.0 


Other alloy pipes 


182.1 


Total 


3.474.1 


Grand total 


7,121.7 



During 1973-81, inclusive, the United 
States accounted for 14.7% of all of Ja- 
pan's exports. However, U.S. imports 
from Japan have been as high as 45.5% of 
all U.S. imports and averaged 38.3%. 
Thus , Japan is more important as a sup- 
plier of specialty steel to the United 
States compared with the U.S. position in 
Japan's overseas markets. 

The variance in the data for Japanese 
exports to the United States and U.S. im- 
ports from Japan for the same period re- 
sults from classification differences in 
the respective foreign trade data. None- 
theless, since total Japanese exports and 
Japanese exports to the United States and 
total U.S. imports and U.S. imports from 
Japan are both on comparable bases , the 
percentages calculated in table 14 are 
essentially valid. 

Trade classification systems of Japan 
and the United States make it virtually 
impossible to identify the specific types 
of alloy steel being traded. In broad 
terms , about 30% of both the total Japa- 
nese specialty steel exports and Japanese 
specialty steel exports to the United 



TABLE 14. - Japanese exports and U.S. imports of specialty steel, 1973-81 



Year 



Japanese exports 



Total, 

thousand 

tons 



To U.S., 

thousand 

tons 



U.S. share 
of total, % 



U.S. Imports 



Total, 

thousand 

tons 



From Japan, 

thousand 

tons 



"TIT 
Ul3 
252 
260 
326 
338 
257 
250 
350 



Japanese 
share of 
total, % 



1973. 
1974. 
1975, 
1976. 
1977. 
1978. 
1979. 
1980. 
1981. 



1,273 
1,520 
1,258 
1,845 
1,900 
1,884 
1,795 
1,713 
1,702 



162 
184 
173 
243 
331 
316 
315 
198 
274 



12.7 
12.1 
13.8 
13.2 
17.4 
16.8 
17.5 
11.6 
16.1 



1287 
'285 
578 
619 
716 
871 
713 
656 
1,140 



39.4 
39.6 
43.6 
42.0 
45.5 
38.8 
36.0 
38.1 
30.7 



Total. 



14,890 



2,186 



14.7 



5,865 



2,249 



38.3 



'Partial figure; associated percentages are believed to be reasonably indicative of 
Japan's share of total. 



23 



States over the 1973-81 period can be 
classified as stainless steel, and the 
remaining 70% as some other type of alloy 
steel. On a year-by-year basis, there 
seems little pattern in the ratio of 
stainless steel to other alloy steel for 
total Japanese exports; however, by 1981, 
the share of the total accounted for by 
stainless steel was somewhat higher than 
in any year prior to 1973. A similar 
year-by-year examination of Japan's ex- 
ports to the United States seems to show 
a fairly consistent decline in the per- 
centage of stainless steel composing the 
total compared with that of alloy steel. 

As is noted from the above data, the 
United States imports a substantial 
share of its requirements from Japan. 
Actually, the figures for imports of 
semifinished forms of specialty steel in- 
to the United States from Japan does not 
show the full picture. Large tonnages of 
specialty steel are shipped from Japan as 
components in manufactured materials, but 
these tonnages generally cannot be sta- 
tistically separated from other con5)0- 
nents of the manufactures. One of the 
exceptions is tableware, where at least 
a part of the total is identified specif- 
ically as stainless steel tableware. 



During 1972-81, inclusive, Japan exported 
an annual average of over 20,000 tons of 
tableware, of which an annual average of 
7,300 tons or nearly 37% was shipped to 
the United States. (See table 15 for 
annual details.) Similarly, in the case 
of drill bits, reamers, screw taps, mill- 
ing cutters, gear cutters and dies, high- 
speed tool steel can be separated from 
other steel. For these 
Japanese exports averaged 
during 1972-81, of which 
(or 9%) was destined for 
(table 15). 



items, total 

2,403,000 tons 

218,000 tons 

U.S. markets 



The exports of specialty steel in com- 
plex manufactures such as automobiles 
represent much larger tonnages, but they 
are not accurately quantifiable. During 
1972-81, Japan exported almost 24.9 mil- 
lion completely assembled automobiles, of 
which over 12.1 million were destined for 
the United States. On the assumption 
that each car contains only 100 kg of 
specialty steel, an annual average ship- 
ment of over 120,000 tons of such steel 
in automobiles to the United States is 
indicated for the decade. This amount 
probably understates the actual quantity, 
but indicates the order of magnitude. 



TABLE 15. - Export of selected products containing specialty steel 



Commodity 



1972 



1973 



1974 



1975 



1976 



Tableware, stainless steel, tons: 

Total Japanese export 

Japanese export to United States 

Drills, bits, reamers, screw taps, milling 
cutters, gear cutters, dies, tons: 

Total Japanese export 

Japanese export to United States 

Passenger autos assembled, thousands: 

Total Japanese export 

Japanese export to United States 



Tableware, stainless steel, tons; 

Total Japanese export 

Japanese export to United States 

Drills, bits, reamers, screw taps, milling 
cutters, gear cutters, dies, tons: 

Total Japanese export 

Japanese export to United States 

Passenger autos assembled, thousands: 

Total Japanese export , 

Japanese export to United States , 



19,397 
7,172 



453 
94 

1,313 
638 



1977 



19,601 
6,476 



4,431 
183 

2,778 
1,392 



20,611 
7,277 



492 
103 

1,283 
626 



21,172 
7,080 



544 
104 

1,551 
732 



19,972 
7,357 



1,189 
144 

1,594 
739 



1978 



1979 



1980 



18,278 
6,551 



3,628 
210 

2,883 
1,521 



18,655 
8,013 



3,735 
458 

3,117 
1,642 



21,161 
7,735 



5,247 
442 

4,027 
1,921 



20,593 
8,129 



1,485 
132 

2,316 
1,097 



1981 



20,855 
7,569 



2,828 
312 

4,009 
1,841 



24 



RAW MATERIALS POLICY 



Of all the industrialized resource-poor 
countries, Japan has undertaken the most 
comprehensive policy measures to insure 
availability of raw materials to its 
economy. To meet domestic demand, Japan 
actively seeks overseas supplies from as 
many raw material sources as possible. 
By securing supplies, Japan protects its 
large domestic processing sector. 

A number of factors, inherent in the 
Japanese mores and modus operandi, con- 
tribute to the successful achievement of 
the policy objectives: 



import market for many miner- 
als, which contributes to its 
bargaining power. This bargain- 
ing power is increased by the 
tendency of Japanese firms to en- 
ter into negotiation as a group 
with suppliers. 

Substantive policy measures have been in 
place to (1) generate overseas supplies, 
and (2) secure raw materials for Japan. 



The following measures are 
generate overseas supplies: 



employed to 



Close Government-industry cooper- 
ation. The consuming industries 
consult closely with Government 
on mineral issues. With inter- 
governmental agency concurrence, 
the Ministry of International 
Trade and Industry (MITI) issues 
policy guidelines to the industry 
as needed, as well as provides 
financial assistance to encourage 
industry in overseas exploration 
and investment. This cooperation 
is not hindered by Japan's anti- 
trust laws, which are not as 
stringent as those in the United 
States. 

Worldwide network of contracts 
through trading companies. The 
nine major firms (Mitsubishi 
Corp., Mitsui and Co., C, Itoh 
Co., Marubeni Corp., Sumitomo 
Corp. , Nissho-Iwai Corp. , Toyo- 
Menka Kaisha, Kanematsu-Gosho, 
Nishimen Co.) may account for 
more than half of Japan's trade 
and as much as 8% of the world's 
total trade activities. The 
trading companies and their af- 
filiated metal firms are involved 
in foreign mineral investment and 
trade in minerals. These con- 
tacts also are helpful in target- 
ing overseas mineral exploration 
and investment opportunities. 

Bargaining power with producers. 
Japan has the largest or nearly 
the largest share of the world 



• Promoting overseas exploration. 
There are regular programs for 
overseas mineral exploration by 
the Metal Mining Agency of Japan. 
These programs provide financial 
assistance for Japanese mining 
companies' geological surveys; 
for Japanese companies' joint ex- 
ploration with foreign partners; 
and for overseas exploration. 

• Promoting overseas investment. 
Privated investment in overseas 
mineral resources is promoted by 
guaranteeing loans made for such 
purposes , providing political 
risk insurance, and supporting 
mineral projects through aid pro- 
grams. Mining projects also 
qualify for Japanese Export- 
Import Bank assistance. Bilater- 
al aid programs are also coordi- 
nated with mineral development 
Interests. 

• Offering tax incentives for over- 
seas exploration and development. 

• Promoting of research and devel- 
opment through innovative pros- 
pecting technology and explora- 
tion methods, seabed mineral 
technology projects, etc. 

• Providing technical assistance 
to suppliers. Joint geological 
surveys and regional develop- 
ment surveys with developing 
countries. 



25 



Measures to secure overseas supplies. 

• Japan relies on the diversifica- 
tion of sources of supply result- 
ing from all the programs cited 
above, and In securing a conclla- 
tory attitude by foreign-policy 
support for mineral-producing 
countries. 

• In 1976, Japan established three 
stockpiling programs: nonfer- 
rous, light, and "special metals" 
(which Includes nickel, chromlim, 
tungsten, cobalt, and molybde- 
num). Japan's metals stockpiles 
stabilize supply from possible 
short-term disruption In terms of 
either price or quantity; serve 
as an economic tool for Impacted 
Industries during protracted re- 
cessionary times; preserve the 
terms of ratified contracts that 
Involve long-term deliveries; 
and. Implicitly, enhance the Jap- 
anese negotiations for overseas 
raw materials. 

Measures to assist the domestic 
Industry. 

• Emergency financial assistance. 
Metal Mineral Agency of Japan 



provides guaranteed loans to 
copper- and zlnc-mlnlng companies 
to Insure a stable supply of ma- 
terials from domestic sources, 
which provides a fall-back posi- 
tion In extreme situations. 

• Promotion of domestic explora- 
atlon. Government -run wide-area 
geological surveys of select- 
ed districts, subsidies for de- 
tailed geological surveys, and 
support for Individual country 
prospecting. 

Although Interruption of supply may not 
be completely ruled out. It seems unlike- 
ly that Interruption would be total. 
Perhaps as much as 50% of supply may be 
denied to the economy. The domestic min- 
ing Industry and the stockpile would be 
the only factors to mitigate the unfavor- 
able Impact of the supply Interruption. 

The risk of supply Interruption Is not 
the same for all ferroally ores. Rela- 
tive geographical vicinity to the Philip- 
pines, China, India, and Indonesia, and 
the mineral trade relationship with Aus- 
tralia may continue to offer Japan a mea- 
sure of supply assurance for minerals 
produced abundantly In the area. 



MEASURES TO ASSURE SUPPLY 



STOCKPILE PROGRAMS 

Japan has Initiated three stockpiling 
programs, each for a different group of 
metals. The first stockpiling program 
was started In 1976, the second In 1982, 
and the third proposed for 1983. The 
stockpile objective for each metal Inven- 
tory In these programs does not exceed a 
2-month consumption; In fact, many were 
for only a lO-day consumption. In this 
respect, Japan's stockpiling program Is 
different from the U.S. strategic stock- 
pile. Furthermore, Industry use of the 
stockpiles (labeled economic) Is not pre- 
cluded, and In fact, the metals inventory 
is held by Industry. 



The first program, started in 1976 and 
administered by the Nonferrous and Light 
Metals Stockpile Association, established 
targets of 9,570 tons of aluminum, 50,370 
tons of copper, and 12,050 tons of lead 
and zinc. At the end of September 1982, 
metal Included in the stockpile was 
29,284 tons of aluminum, 1,986 tons of 
copper, and 73,158 tons of zinc. Changes 
in the stockpile inventory objective for 
each metal reflect economic and market 
conditions. Purchases for the stockpile 
were made to assist producers when demand 
was weak. Disposals were made from the 
stockpile to benefit the consuming sector 
when demand was strong or in anticipation 
of a short-term shortage. Other changes 



26 



resulted from assistance to a distressed 
industry or for the stabilization of do- 
mestic metal prices. This stockpile pro- 
gram is financed by bank loans supervised 
by the Metal Mining Agency of Japan. 

The second stockpile program was for 
chromium, cobalt, molybdenum, nickel, and 
tungsten and is administered by the Spe- 
cial Metals Stockpile Association. On 
November 30, 1982, the following stock- 
pile objectives, equivalent to a 10-day 
consumption, were established: cobalt 
metal, 50 tons; ferrochromivim, 15,275 
tons; molybdenum concentrate, 395 tons; 
nickel metal, 1,148 tons; ferronickel, 
1,620 tons; nickel oxide sinter, 175 
tons; and tungsten concentrate, 47 tons. 
Funds for the stockpile program were be- 
ing financed by a Government-guaranteed 
loan from Japanese banks. Purchases for 
chromium, cobalt, and nickel began in 
December 1982; purchases for tungsten and 
molybdenum were expected to begin in Jan- 
uary 1983. 

Beginning in 1983, the Ministry of Fi- 
nance was to secure revenue for the pur- 
chase of the following 11 metals for a 
national stockpile proposed by MITI in 
August 1982: antimony, chromium, cobalt, 
columbitmi, manganese, molybdenum, nickel, 
palladium, strontium, tungsten, and vana- 
dium. The final stockpile objective for 
each metal — equivalent to a 2-month 
consumption — was to be attained by 1987 
through annual purchases equivalent to a 
12-day consumption. In early 1983, the 
national stockpile program, however, was 
reduced to seven metals, eliminating an- 
timony, columbium, palladium, and stron- 
tium. Purchases for the stockpile, to be 
conducted by the Special Metals Stockpile 
Association, are to begin in October 
1983. Molybdenum and tungsten are to be 
stockpiled in the form of concentrate; 
cobalt and vanadium as metal; nickel as 
metal, ferronickel, and oxide sinter; and 
manganese as metal, ferromanganese, and 
dioxide. 

CHROMIUM 

Although the Republic of South Africa 
has been Japan's largest supplier of 



chromite and f errochromium (table 6) , 58% 
of the total imports of chromite for 
1972-81 has come from non-South African 
sources. For ferrochrome. South Africa 
continues to be the dominant supplier. 
Nonetheless, the diversification of 
sources for the ore is a positive factor 
in future supplies. 

Since 1970, Japan has made several ef- 
forts to achieve the diversification of 
sources and establish long-term economic 
or commercial relationships with a vari- 
ety of major supplying countries, such as 
the Philippines, Turkey, South Africa, 
and Brazil. In 1970, Japan reportedly 
offered financial assistance to Acoje 
Mining Co. of the Philippines in exchange 
for increasing its chromium ore exports 
to Japan. In 1971, the Japan Metals and 
Chemicals Co. entered into an agreement 
with Turkey's state-owned Etibank to im- 
port 100,000 tons of chromite annually 
from 1972 to 1981. In return, the Japa- 
nese firm offered technology transfer and 
construction of a f errochromium plant in 
Turkey by yearend 1973. In 1971, Japan 
Heavy Chemical Industry Co. reportedly 
was helping Johannesburg Consolidated In- 
vestment Co. (JCIC) to conduct a survey 
of chromium ore deposits owned by JCIC in 
Middleburg-Wietbank in South Africa. 
In return, the South African organiza- 
tion agreed to export about 300,000 tons 
of chromium ore and an unspecified amount 
of pellets to Japan annually over an 
unspecified period. In 1971, Nippon 
Heavy Chemical Industry Co. and Showa 
Denko Co. of Japan had reportedly of- 
fei;ed their technical knowledge on pro- 
cessing powdered chromium ore for ferro- 
chromium production to the Brazilian firm 
Cia. de Ferro Ligas da Bahia, S.A. (Fer- 
basa) . In return, Ferbasa was to guaran- 
tee chromium ore shipments to the two 
Japanese firms for an unspecified long 
period. 

Investment in the Jacobina project in 
Brazil has been another move by Japan in 
securing overseas chromium ore and f erro- 
chromium. In 1972, the Brazil Chromium 
Resources Development Co., a Japanese 
consortium composed of Japan Metals and 
Chemicals Co. and six other companies. 



27 



was formed. Later, a joint-venture firm, 
Cia. de Mineracao Serra da Jacobina 
(Serjana), was established by the Brazil- 
ian Ferbasa (51%) and the Japanese con- 
sortium (49%). Serjana started operation 
at Campo Formoso in Bahia in 1976, and 
began shipments of chromite and ferro- 
chromium to Japan in 1977. Since 1972, 
the Japanese consortium has reportedly 
inviested about $8 million for developing 
the mine. However, in 1980, Japan with- 
drew from the joint venture because of 
the high cost of shipping the ore and a 
planned reduction in the Japanese ferro- 
chromium capacity. 

During 1975-79, a number of Japanese 
companies were actively involved in 
joint-venture exploration and development 
of chromite resources in Madagascar, Su- 
dan, Indonesia, and Papua New Guinea. A 
brief description and status of these 
joint-venture projects follow: 

Madagascar . — Madagascar Chromium Re- 
sources Development Co. , a Japanese con- 
sortium led by C, Itoh & Co. (and in- 
cludes Japanese ferrochromium producers) 
engaged in exploration of deposits in 
Bemanevika near Andriamena. If devel- 
oped, most of the chromite output would 
be exported to Japan. Under a contract 
signed in 1974, Madagascar began ship- 
ments of about 60,000 tons of chromite to 
Japan annually. 

Sudan. — Mitsubishi Corp. and Japan Met- 
als & Chemical Co., Ltd., conducted ex- 
ploration in the Ingessana Hills area. 
The deposits were found to be podiform 
and not consistently of high grade. In 
1982, a feasibility study was completed 
for a $50 million project, which included 
the construction of a ferrochromium plant 
and the establishment of a joint-venture 
mining firm (owned 41% by the Japanese 
firms). Subsequently, the Japanese pro- 
posed a scaled-down project involving a 
20,000-ton-per-year ferrochrome plant, 
but in late 1982 no agreement had been 
reached. Nonetheless, under a separate 
agreement, Sudan exported 50,877 tons of 
chromite to Japan during 1973-^76 and an 
additional 4,500 tons in 1980. 



Indonesia . — Japan Sulawesi Chrome De- 
velopments, Ltd., a Japanese consortium 
composed of Kanematsu Gosho, Ltd. , 
Kawatessu Trading Co. , and Chuugnai Min- 
ing Co. , agreed to conduct a $1 million, 
2-year exploration for chromium in nickel 
later ites on Sulawesi Island, an area 
about 110 miles north of Pare-Pare. If 
developed, initial output of 200,000 to 
400,000 tons of byproduct chromite would 
be exported to Japan annually. Kawasaki 
Steel Corp. engaged in a $3 million, 2- 
year exploration project on the islands 
of Sulawesi and Halmahera, with the same 
condition that the chromite would be 
shipped to Japan. 

Papua New Guinea . — Exploration in Sal- 
amaua and Salua was to be done by Kawa- 
saki Steel Corp. in a joint venture with 
AMAX Exploration, Inc. , of the United 
States. 

The foregoing illustrate actions taken 
to diversify sources. Nonetheless, in 
view of the importance of the Republic of 
South Africa, a supply interruption from 
this source and one or two other source 
countries listed in table 6 would result 
in a supply decrease of about 50% and, 
consequently, a substantial reduction in 
the production of stainless steel, heat- 
resisting and other alloy steels, and 
such chrome chemicals as dichromate for 
tanning. Since new technology allows use 
of lower grade chromite for the produc- 
tion of ferrochromium, it may be possible 
to compensate for part of the shortage by 
increasing imports from the Philippines. 
Moreover, the potential for development 
of significant chromite deposits in In- 
donesia, never before a significant pro- 
ducer, cannot be overlooked, nor can the 
possiblity of increased acquisition from 
such sources as Albania, Vietnam, Mada- 
gascar, and Iran. Beyond that, availa- 
bility of stockpile material could only 
meet a short-term interruption in supply. 

COBALT 

Zaire is a significant supplier of 
Japan's cobalt in the form of elemen- 
tal cobalt and basic cobalt chemicals 



28 



(virtually all cobalt credited to Belgium 
originated in Zaire). Over the 1972-81 
decade, 80Z of Japan's total import of 
cobalt in the listed chemicals and metal 
forms was obtained either directly from 
Zaire or from Zaire through Belgium. In 
terms of Japan's total supply of cobalt, 
however, the geographical source pattern 
change started in 1976, when the country 
began producing cobalt metal in substan- 
tial quantities. The cobalt was recov- 
ered chiefly from nickel-cobalt materials 
obtained mainly from the Philippines and 
Australia but partly from domestic ores. 
As a result, cobalt imports from Zaire 
during 1972-81 represented about 57% of 
Japan's supply, but in the 5-year period 
1977-81, those Imports probably did not 
exceed 33% of supply. 

The shift was partly the result of the 
signing of a long-term contract in 1976 
between Sumitomo Metal Mining and the 
Philippine Marinduque Mining and Indus- 
trial Corp. for shipment of nickel sul- 
fide and nickel-cobalt sulfide, presuma- 
bly from the Nonos Island deposit that 
had been developed with Japanese finan- 
cial and technical assistance. The other 
contributing factor was Nippon Mining 
Co. 's acquisition of mixed nickel-cobalt 
sulfides from Greenvale, Australia, under 
a long-term contract. 

Current and near-future dependence on 
Zaire would diminish if cobalt is in- 
creasingly obtained from other producers, 
most notably Finland and Zambia, both of 
which are expanding production. Another 
possibility for reducing dependence on 
Zaire is the recovery of cobalt from 
nickel ores now being mined in New Cale- 
donia, Indonesia, and elsewhere. Cur- 
rently, their processing operations do 
not recover cobalt separately but leave 
It as a minor coiqponent of the ferro- 
nickel produced. 

Substitution of other materials for 
cobalt could reduce dependence on 
Zaire. For example, high cobalt prices 
in recent years has resulted in a near- 
worldwide shift away from cobalt in cut- 
ting, wear-resistant, and magnetic al- 
loys. Further, a small share of total 



annual consumption, estimated at about 
1,500 tons, might be provided by addi- 
tional recovery from complex domestic 
ores. 

In the longer term, Japan's Seabed Min- 
eral Exploration Technology Projects in- 
clude a series of programs designed to 
improve exploration methods for deepsea 
nodules, which contain manganese, nickel, 
cobalt, and mineral deposits, on the 
country's continental shelf. The devel- 
opment of such technologies has been des- 
ignated a "national project." 

Despite some diversification of co- 
balt producers, a long-term interruption 
in the supply of Zairian cobalt would 
cause problems for all consumers. Includ- 
ing Japan. Presumably to minimize dis- 
ruption, the Japanese Government has 
helped to establish and has participated 
in three stockpiling associations (e.g., 
the Special Metals Stockpiling Associa- 
tion) , which maintain a supply of chromi- 
um, cobalt, molybdenum, nickel, and tung- 
sten (Including ores and intermediate 
products). 

MANGANESE 

In recent years, Japan's domestic re- 
sources have not met even a fraction of 
its total demand for manganese. Conse- 
quently, during 1972-81, Japan imported 
an average of about 1.1 million tons per 
year to maintain a relatively stable lev- 
el for manganese in all forms. Domestic 
mine output over the decade was only 3.2% 
of total supply, in terms of metal con- 
tent, and constituted only 2.2% of the 
1981 total. In contrast to the situation 
with chromium, only a small fraction of 
the need for imports has been met by man- 
ganese ferroalloys; average annual im- 
ports in this form were only 9,400 tons 
during 1972-81. Virtually all imports 
have been as ores: manganiferous iron 
ores of 15% or less manganese, ferrugi- 
nous manganese ores that average about 
25% to 30% manganese, metallurgical 
grades of 40% or more manganese, and rel- 
atively small quantities of battery-grade 
ore (dioxide ore) with 50% or more con- 
tained manganese. The lower grades of 



29 



ore (manganlferous iron ore and ferrugi- 
nous manganese ore) have been obtained 
almost exclusively from the Republic of 
South Africa and India, particularly 
since 1977. 

Imports of regular metallurgical-grade 
manganese ore have been predominantly 
from the Republic of South Africa (36% of 
1972-81 total) and Australia (35% of that 
total) , but the remaining approximately 
28% was furnished by nine large suppliers 
and a number of minor sources. Special 
dioxide ore, essential for its uses but 
never a major component of total supply, 
has been obtained from a variety of coun- 
tries, with Gabon and Australia being the 
major sources in recent years. In sum- 
mary, the Republic of South Africa, Aus- 
tralia, and India have been the principal 
sources of imports of manganese-bearing 
ores. In the late 1970' s, India re- 
stricted exports of high-grade manganese 
ore but permitted exports of low-grade 
ore. In the early 1980' s, there were la- 
bor disputes in Australia. Interruption 
of supply from either of these countries 
and the Republic of South Africa would 
adversely affect the Japanese iron and 
steel industry. However, Australia and 
India, because of geographical proximity, 
will, in all likelihood, continue to be 
sources. Also, Japan has established 
trade ties for relatively modest but con- 
tinuous imports from other major world 
producers of manganese ore such as Bra- 
zil, Gabon, and China, as well as with 
smaller steady suppliers such as Mexico 
and Ghana; thus, some diversification of 
import sources has been achieved. Con- 
ceivably, in a crisis, Japan may, as in 
the past, obtain a modest supply of ore 
from the U.S.S.R. 

Any potential supply shortage could be 
partially alleviated without major dis- 
ruption to domestic consumers by reducing 
f erromanganese exports, which have been 
equal to 11% of domestic output and 10% 
of available supply (production plus im- 
ports) during 1972-81, inclusive. None- 
theless, it may not be feasible to fill 
the supply gap resulting from an inter- 
ruption of ore receipts from the Republic 
of South Africa. 



NICKEL 

Japan is a major consumer of nickel but 
is wholly dependent on foreign sources. 
Imports include ore, ferronickel, ingot 
nickel, and a variety of intermediate 
metallurgical products, such as matte, 
speiss, nickel-cobalt sulfides, and nick- 
el oxide, from sources shown in table 9. 
Although some ferronickel is exported, 
Japan is a net importer of ferronickel. 

Nickel ore imports (grading about 1.7% 
nickel) show no discernible trend; im- 
ports of intermediate products and ferro- 
nickel have shown a slightly rising trend 
during the 1972-81 decade, but the varia- 
tions in the nickel content of all im- 
ports generally reflect the ore imports 
(calculated at 1.5% recoverable nickel), 
which are the principal raw material for 
the Japanese industry. Practically all 
of this ore comes from New Caledonia, In- 
donesia, and the Philippines; Indonesia 
and New Caledonia are also the most im- 
portant suppliers of ferronickel. Since 
1974, Australia has been a supplier of 
nickel intermediate products. In effect, 
the principal sources are either in 
neighboring Philippines or the Indian 
Ocean-South Pacific area, which may be a 
favorable factor in the continued future 
supply of nickel to the Japanese economy. 
Japan and Australia have developed close 
trade relationships in the mineral area. 
Japan has provided Australia a natural 
market for its mineral exports. As a re- 
sult, the two-way trade between the two 
countries has grown from $7.5 billion in 
1976 to $12.2 billion in 1981. Japan's 
investment in Australia has also in- 
creased. In fiscal 1980, about $431 mil- 
lion (or about 9.2%) of $4.7 billion in 
direct overseas investment by Japan has 
been in Australia. 

The Japanese involvements in overseas 
exploration and development of nickel 
mines were principally in Indonesia and 
the Philippines, and to a lesser extent, 
in Australia. The activities involved 
direct investment in equity, technologi- 
cal assistance, and the so-called loan 
and sales agreement to secure long-term 
purchases of output. 



30 



Japan's direct investments for the 
development of nickel mines included 
the Inco Soroako nickel project in 
South Sulawesi of Indonesia and the Rio 
Tuba nickel project on Palawan Island 
of the Philippines. The Soroako proj- 
ect of Indonesia was developed in the 
mid-1970's, with a 2.6% equity partici- 
pation ($11.25 million) by six Japa- 
nese companies led by Tokyo Nickel Co. 
and Shimura Kako Co. The Metal Mining 
Agency of Japan reportedly provided a 
$36 million development loan to the 
project. Rio Tuba project of the Phil- 
ippines was also developed in the mid- 
1970' s with a 40% equity participation 
($881,000). Participation was distrib- 
uted among the following companies: 
Pacific Metals Co. (26.8%), Nippon Steel 
Corp. (5.2%), Nisshin Steel Co. (4%), 
and Nissho-Iwai Co. (4%) of Japan. The 
Metal Mining Agency of Japan reportedly 
provided a $24.2 million development 
loan to the projects. Most of the 
nickel in ore or matte produced by these 
two projects were being exported to 
Japan. 

Japanese technological assistance and 
about $60 million in loans were report- 
edly extended by Kobe Steel Ltd. , Mitsui 
Mining and Smelting Co., and other firms 
to the Nonoc nickel project in Surigao 
on Nonoc Island of the Philippines. 
Marinduque Mining and Industrial Corp., 
the owner and operator of the project, 
exports annually about 10% of its nick- 
el output and all of its nickel-cobalt 
mixed sulfides to Japan for further 
processing. 

Nippon Mining Co. and four other Japa- 
nese companies signed a loan and sales 
agreement in 1971 with Metals Explora- 
tion Co. of Australia and Freeport Sul- 
phur Co. of the United States for the 
development of Greenvale nickel project 
in northeast Australia. Under the agree- 
ment, the Japanese were to provide a $30 
million loan to the project. In return, 
the owner and operator of the project was 
to export about 2,500 tons of nickel 
oxide and 4,000 tons of nickel-cobalt 
mixed sulfides annually to Japan for 
15 years. 



TUNGSTEN 

There has been a gradual decline in do- 
mestic production of tungsten ore and 
ferrotungsten (from domestic and imported 
raw materials), but imports have fluctu- 
ated without a discernible trend (table 
10), Supply of tungsten in all forms 
during this decade ranged from a minimum 
of about 2,170 tons of metal content to a 
maximum of 4,570 tons, of which 670 to 
900 tons was from domestic sources. Im- 
ports of concentrates, ferrotungsten, and 
metal account for about three-fourths of 
the 10-year supply. Imports of concen- 
trates have come from 25 sources, 10 of 
which have accounted for the bulk of the 
total and have been consistent suppliers. 
The Republic of Korea has been the domi- 
nant single source over the decade (31% 
of the total) , and the only significant 
supplier of tungsten metal since 1976. 
In contrast, Austria, Brazil, Portugal, 
and China have been the principal suppli- 
ers of ferrotungsten, with no discernible 
pattern from year to year. 

By far the largest share of the tung- 
sten consumption in Japan, as in other 
industrialized countries, is for the 
production of ultrahard alloys for cut- 
ting tools and wear-resistant materials. 
Tungsten, as ferrotungsten for making 
alloy steels, accounts for 15% of total 
consumption. 

As with nickel, a number of significant 
world producers of tungsten ores, concen- 
trates, and metals are in Southeast Asia 
and the Far East (Republic of Korea, 
Thailand, and China); Australia is also 
an important producer. This favorable 
geographical distribution of tungsten- 
producing countries reduces Japan's risk 
of supply interruption. Domestic produc- 
tion of ferrotungsten has declined, and 
the compensating increase in imports is 
largely from Austria, Brazil, and Portu- 
gal. In terms of total supply, ferro- 
tungsten imports are not large, and large 
imports from China could fill a gap. 
Moreover, considering the relatively 
small quantity required annually, stock- 
piling might provide the answer to any 
short-term interruption of supply. 



IMPLICATIONS OF SUPPLY INTERRUPTION 



31 



IMPACT ON THE JAPANESE ECONOMY 

A simplistic view of the role of the 
Japanese steel industry in the nation's 
economy is reflected in its rather small 
contribution to the gross domestic prod- 
uct (GDP). In 1980, the steel industry, 
the major component of the basic metals 
industry, provided the largest part of 
the 3.8% share of the GDP credited to 
basic metals (table 16) , as well as the 
largest part of the 1.5% share of GDP 
credited to fabricated metal products. 



Similarly, as shown in table 17, the ba- 
sic iron and steel industry accounts for 
only 0.8% of the total labor force, and 
the fabricated metal products industry 
(including nonferrous metal fabricators) 
employs only 1.3%. 

However, the overall impact of the 
steel industry on the econocoy is consid- 
erably greater because other industries 
listed in the GDP summary table and the 
industrial employment table have steel as 
an essential input. These industries. 



TABLE 16. - Gross domestic product in 1980, by industry 



Industry 



Gross domestic 


Sector 


product , bil- 


contribu- 


lion yen 


tion, % 


5,082.8 


2.2 


2,262.7 


1.0 


8,955.7 


3.8 


3,477.6 


1.5 


6,354.3 


2.7 


8,491.3 


3.6 


9,635.8 


4.1 


1,462.2 


.6 


25,356.8 


10.8 


71,079.2 


30.3 


21,480.2 


9.1 


132,199.5 


60.6 


234,758.9 


100.0 



Manufacturing : 

Chemicals 

Petroleum and coal products 

Basic metal 

Fabricated metal products 

Industrial machinery 

Electrical machinery, equipment, supplies 

Transport equipment 

Precision instrutments 

Other 

Total 

Construction 

Other 

Grand total 



TABLE 17. - Employment in 1980, by industry 



Industry 


Employment , 
thousands 


Proportion, 

% 


Manufacturing : 

Chemi cals 


409 

44 

429 

190 

745 

1,027 

1,337 

887 

264 

4,956 


0.7 


Petroleum and coal products 

Iron and steel. .......................... 


.1 
.8 


Nonferrous metal products 

Fabricated metal products 

Industrial machinery 

Electrical machinery, equipment, supplies 

Transportation equipment 

Precision machinery 

Other 


.3 
1.3 
1.9 

2.4 

1.6 

.5 

9.0 


Total 


10,288 

5,480 

38,592 


18.6 


Construction. ••• 


9.9 


Other 


71.5 


Grand total 


55,360 


100.0 



32 



which together account for 30.3% of the 
GDP and 18.6% of the labor force, depend 
on steel as an indispensable input and 
require specialty steel for a substantial 
part of that input (as in the machine 
tool industry) or for certain components 
of the manufacturing process (as in 
equipment and materials in the chemical 
or food industry). The diversity of uses 
of specialty steel within the manufactur- 
ing sector in 1980 is shown in table 18. 

In addition to its vital role in the 
manufacturing sector, Japan's specialty 
steel industry is closely linked to the 
economic health of the construction in- 
dustry, which accounts for 9.1% of GNP 
and 9.9% of total employment. Specialty 
steel is also essential to numerous other 
elements of the economy, such as agricul- 
ture, forestry, fishing, mining, public 
utilities, transportation, and communica- 
tions. As a large exporter of industrial 
and precision machinery, electric machin- 
ery, vehicles, etc., Japan needs to con- 
tinue producing about 13 million tons per 
year of specialty steel to maintain its 
eminent position as a world exporter of 
finished products. 

Japan also is an exporter of other al- 
loy steel. In the 1972-81 decade, these 



exports ranged from 1.26 million tons to 
1.9 million tons. These exports would 
suffer if production of specialty steel 
were interrupted or diminished because of 
inadequate supplies of the necessary fer- 
roalloy raw materials. 

IMPACT ON THE U.S. ECONOMY 

Japan's overall favorable merchandise 
trade balance of $8.7 billion for 1981 
reversed the annual, negative balances of 
$7.6 billion in 1979 and $10.7 billion in 
1980. Japan's deficit trade results pri- 
marily from the cost of crude oil imports 
from the Middle East. On the other hand, 
Japan's positive merchandise trade sur- 
plus with the United States was $6.0 bil- 
lion in 1979, $7.0 billion in 1980, and 
$13.3 billion in 1981. During the mid- 
seventies , the world energy crisis began 
to take its toll. Some U.S. industries, 
including iron and steel, were weakened 
and began to perform poorly, reflecting 
depressed domestic and international mar- 
ket conditions, and perhaps poor planning 
and management. In January 1978, the 
United States imposed a trigger price 
mechanism, primarily aimed at Japanese 
and European steel exports, as a safe- 
guard against the "dumping" of lower 
priced, imported products. 



TABLE 18. - Demand for specialty steel products in 1980, by industry 



Industry 


Domestic demand, 
thousand tons 


Distribution, 

% 


Automobiles 


1,487 

441 

2,797 

73 

199 

1,079 

35 

73 

845 

130 

119 


20.4 


Construction and repairing 


6.1 


Conversion and orocessins. ......... 


38.4 


Electric machinery and equipment... 

Home and office furnishings 

Industrial machinery and equipment. 
Rolling stock 


1.0 

2.7 

14.8 

.5 


Shipbuilding and marine equipment.. 
Dealers and traders 


1.0 
11.6 


Tanks and containers 


1.8 


Other 


1.7 


Total 


7,278 


100.0 



33 



Japan's role as a supplier to the 
United States of partly processed forms 
of the commodities covered in this report 
is not very substantial. Although past 
Japanese exports to the United States 
have represented a substantial part of 
that nation's total exports of ferro- 
alloys , these shipments have been only a 
modest and diminishing part of total U.S. 
ferroalloy imports over the 1972-81 dec- 
ade. Even when the aggregate ferroalloy 
imports are broken down by alloy type, 
Japan's contribution to the total U.S. 
import has never been the largest single 
element of total U.S. supply. Although 
it might not be possible to increase 
domestic output immediately, U.S. produc- 
tion capacity for ferroalloys could easi- 
ly replace current imports from Japan, 
assuming that imported supplies of manga- 
nese and chromium ores could be obtained. 
On the other hand, an increase in imports 
from other foreign producers, chiefly 
those in Western Europe, the Republic of 
South Africa, and/or Brazil, could sub- 
stitute for the relatively small volume 
of material obtained from Japan. 

Japan's exports to the United States 
comprised less than 15% of total Japa- 
nese exports of specialty steel semimanu- 
factures, but comprise over 38% of U.S. 



imports. However, the share of total 
U.S. supply was much lower, owing to the 
relatively high proportion of total sup- 
ply met by U.S. production. Although al- 
loy steel imports from Japan were more 
substantial than those of ferroalloys, 
idle U.S. capacity could easily fill the 
shortfall, or suppliers in Western Europe 
could fill a supply gap if Japanese ship- 
ments were reduced. It is assumed that 
the former option could be implemented 
expeditiously. If neither is exercised 
promptly, demand for specialty steel for 
a number of nonessential decorative uses 
would have to be reduced. 

Should the level of manufacturing in 
Japan suffer because of lack of raw mate- 
rial supply, Japanese export of manufac- 
tures would result in reduced exports to 
the United States and to the rest of the 
world. Currently, this would spur U.S. 
output, but limited and reduced supply 
would increase prices. In the long run, 
it is possible that products such as 
U.S. -manufactured Japanese automobiles 
will increasingly appear on the U.S. mar- 
ket. For consumer durable goods made 
with specialty steel (e.g., drill bits, 
cutting tools , and hand tools , and indus- 
trial items), the costs to U.S. consumers 
and users would rise. 



CONCLUSIONS 



Japan is overwhelmingly dependent on 
imports of chromium, cobalt, manga- 
nese, nickel, and tungsten in various 
forms such as ores , concentrates , and 
metal for producing ferroalloys need- 
ed in making various types of specialty 
steel. Interruption of Japan's supply 
of these raw materials would threaten 
its immense manufacturing industry, and 
would also diminish the supply of these 
materials for countries importing from 
Japan. 



Although the risk in the interruption 
of supply of the five essential ferroal- 
loy ores and metals cannot be completely 
eliminated, Japan, among the resource- 
poor industrialized countries, is better 
prepared to deal with such a contingency. 
This results mainly from elaborate and 
multifaceted policy measures and initia- 
tives , including close Government- 
industry cooperation, a network of con- 
tracts through trading companies , and 
unique individual business acumen and so- 
cietal ethics of the country. 



34 



BIBLIOGRAPHY 



1, Arumu Publishing Company (Tokyo). 
Industrial Rare Metals. No. 75, Annual 
Review 1981, 164 pp.; No. 78, Annual Re- 
view 1982, 168 pp. 

2. Japan Economic Journal (Tokyo). 
Industrial Review of Japan. Annual is- 
sues, 1978-82. 



9. Ministry of International Trade 
and Industry (Tokyo). Monthly Report of 
Iron and Steel Statistics. December is- 
sues for years 1975-82. 



10. 



Statistics. 
1981-82. 



Monthly Report of Resource 
December issues for years 



3. Japan Iron and Steel Federation 
(Tokyo). Monthly Report of Iron and 
Steel Statistics. January 1980-January 
1983. 



4. 



The Steel Industry of Ja- 



pan. Annual issues, 1980-82. 



11. . Yearbooks of Mining, Non- 
ferrous Metals, and Products Statistics. 
1972-81. 

12. Prime Minister's Office, Statis- 
tics Bureau (Tokyo). Japan Statistical 
Yearbooks. 1978-82. 



5. Japan Tariff Association (Tokyo). 
Japan Exports and Imports, Commodity by 
Country. December issues 1972-82. 



13. Sumitomo Corporation (Tokyo). 
Nonferrous Metals in Japan 1981-82. 
April 1982, 129 pp. 



6. Kawata Publicity, Inc. (Tokyo). 
Japan's Iron and Steel Industry. Annual 
issues. 1978-81. 



14. Roskill Information Services Ltd. 
(London). Roskill 's Letter From Japan, 
January 1978-December 1982. 



7. Metal Mining Agency of Japan 
(Tokyo). Annual Reports. 1978-81. 



15. Tex Report, Ltd. (Tokyo). Ferro 
Alloy Manual 1978. 286 pp. 



8. 



Mining Activities of Japan 



1980, 34 pp. 



16. 
309 pp. 



Ferro Alloy Manual 1982. 



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